Introduction: Lord Stern of Brentford

Lord Stern of Brentford—Sir Nicholas Herbert Stern, Knight, having been created Baron Stern of Brentford, of Elsted in the County of West Sussex and of Wimbledon in the London Borough of Merton, for life, was introduced between the Lord Wilson of Tillyorn and the Lord Turner of Ecchinswell, and made the solemn affirmation.

Pensions: National Insurance Contributions

Baroness Hollis of Heigham: asked Her Majesty's Government:
	When they will report on their commitment, made during the passage of the Pensions Act 2007 through Parliament, to help women to buy back additional national insurance years.

Lord McKenzie of Luton: My Lords, the Government committed to look at a range of options to help individuals who have gaps in their national insurance contribution records to purchase additional voluntary contributions. This work is now complete. The options were analysed in terms of fairness, affordability and simplicity. The Government have concluded that none of the options considered passes these assessment criteria and none is particularly well targeted, and therefore have decided to make no changes to the current rules to allow individuals to buy additional national insurance contributions.

Baroness Hollis of Heigham: My Lords, I am profoundly dismayed by that Answer. In my view, it will not do. Does my noble friend accept that there are coming before the Commons, and therefore to your Lordships' House in due course, the National Insurance Contributions Bill and the personal accounts Pensions Bill and that, if this House agrees, we will continue to fight to ensure that women who have been carers do not find themselves penalised by going into retirement with an incomplete, poor pension?

Lord McKenzie of Luton: My Lords, I well understand the disappointment of my noble friend and others in the House, particularly as she has campaigned so effectively on this issue, but the position is as I have outlined. We should not lose sight of what has happened under this Government in improvements to pensions, particularly for women. For example, the reduction in the number of qualifying years needed for a full basic state pension is 30—a key measure—and, for the first time, paid and credited contributions for caring will be recognised equally for basic state pension and state second pension. Those are important developments, but I am well aware that this debate is quite likely to continue with those two pieces of legislation.

Lord Fowler: My Lords, does the Minister not remember that when the proposal of the noble Baroness, Lady Hollis, was put to this House it was agreed to by a margin of 179 votes to 86? Surely it is a sensible measure; it gives flexibility and it particularly helps women in retirement. Frankly, the sooner it is done, the better.

Lord McKenzie of Luton: My Lords, I am not sure that we on this side should take any lessons from the pensions record of the Conservatives. The challenge for the measures was to reach those people whom my noble friend most wanted to reach but not to have to bear the cost of the others. That has been the difficulty. For example, if this is a policy commitment that the Opposition want to take on, let me explain that the option of an extra nine years pre-2010 and six years post-2010 would cost in cash terms a bit short of £5 billion to 2050—net present value, in prices terms, £1.3 billion. That is the analysis and that is the issue before us.

Lord Davies of Coity: My Lords, is my noble friend aware that, when I became general-secretary of my trade union in 1986, I inherited a situation in which part-time women workers were ineligible for the pension scheme? I not only provided for them to become members of the scheme but I backdated the years of service to ensure that they paid money for those years that they had already completed. I hope that the Government do the same with the national insurance contributions.

Lord McKenzie of Luton: My Lords, pensioners have been well served by this Government. Let us look at the facts of what has happened since 1997. Currently, only around 35 per cent of women reaching state pension age are entitled to a full basic state pension. When the 2010 changes come in, that figure will be three-quarters and, in 2025, 90 per cent, which will be equality with men. Because of the changes that we have made to the state second pension, 2.1 million carers, more than 90 per cent of them women, and 6.1 million low earners, almost 60 per cent of them women, are included in the scheme, which did not provide for them before.

Lord Oakeshott of Seagrove Bay: My Lords, does the Minister accept that, today of all days, when the Government have finally run up the white flag after their appalling treatment of the 125,000 robbed pensioners, this is the last day to try to defend the indefensible on this issue? I give notice that, along with the noble Baroness, Lady Hollis, we on these Benches will be fighting as hard as we can during consideration of the upcoming Pensions Bill to ensure that people get justice. Does the Minister not accept that what is happening here is a Labour Government spending billions to help rich people by giving them top-rate tax relief and preventing poor women, with broken work records, from saving for a modest pension?

Lord McKenzie of Luton: My Lords, it must be easy being a Liberal Democrat: you are responsible for nothing and it does not matter what spending commitments you make, as we see far too often. If one looks at who would not benefit from the proposals, one sees that it would be the poorest women, because the poorest women headed for pension credit would lose pound for pound if they were asked to cough up for additional class 3 contributions. The proposals would not help those women who could not get beyond 60 per cent of their spouse's pension; they would simply be paying in money to no avail. It is not right to characterise it as the noble Lord has done.

Baroness Greengross: My Lords—

Baroness O'Cathain: My Lords—

Baroness Dean of Thornton-le-Fylde: My Lords—

Noble Lords: The Cross Benches.

Baroness Greengross: My Lords, the Government are developing a strategy for carers across the board and I am pleased to be part of that work, but surely it is beyond belief that a group of carers and people who have had caring responsibilities are going to be discriminated against in recouping the pensions that they could have been entitled to if they not taken on that role. Will the Government please reconsider, because this is extremely unfortunate?

Lord McKenzie of Luton: My Lords, I stress again that the challenge has been to reach the very people whom the noble Baroness describes. That is not possible without great intricacies and complications, which is one of the criteria that we set our face against when we discuss these things in this House. The reality is that the role of carers going forward is significantly improved for the reasons that we gave when we debated the Pensions Bill earlier this year.

Post Offices: Closures

Lord Roberts of Llandudno: asked Her Majesty's Government:
	Whether they were consulted by the Post Office on its recent statement that no post office closure decisions will be made before the local elections on 1 May 2008, and whether they support it.

Lord Bach: My Lords, Cabinet Office guidelines clearly state that consultations should not be launched and decisions relating to them announced in an election period. Successive Administrations of both parties have observed those arrangements for many years. The application of the guidelines will have limited impact on the start of public consultations and announcements of decisions as they will relate only to those that would otherwise have been made in the three-week period preceding the local elections on 1 May 2008.

Lord Roberts of Llandudno: My Lords, I appreciate what the Minister says but perhaps I may quote from a letter of 20 November that was sent out to post offices:
	"As you will be aware, the closure of any Post Office can be highly sensitive and can potentially become a local political issue. For that reason, we have been asked by Government"—
	I emphasise, asked by the Government—
	"to introduce a freeze on some elements of the Network Change Programme during the run up to these elections".
	Is that not government intrusion into the ordinary running of elections in the United Kingdom? Is it not a deliberate ploy to hide the bad news—the truth—until it is too late for the electors to do anything about it?

Lord Bach: My Lords, I am very surprised that the noble Lord should consider that to be the case. I shall quote, in my turn, from the guidelines:
	"If a consultation is ongoing at the time an election is called, it should continue as normal".
	However, care should be taken to avoid taking action during election periods,
	"that will compete with ... candidates for the ... attention"
	of the public. That effectively means not undertaking publicity or consultation events,
	"for those consultations that are still in process".
	In answer to the noble Lord's second question, no, it is not a case of suppressing bad news. In fact, the plan for London has been brought forward so that the proposals there will now be published before the moratorium on new consultation starts. They were planned to be published during the purdah period but now they will be produced early. That is hardly suppressing bad news.

Lord Razzall: My Lords, does the Minister accept that the issue of post office closures is extremely sensitive, particularly in local elections, and that, notwithstanding the guidelines he referred to, there is a danger that the Government will have appeared, both last year and this year, to be postponing these decisions simply to protect the interests of the Labour Party?

Lord Bach: Again, my Lords, I am surprised that the noble Lord should take that view. It could not be more wrong. Purdah has been accepted by both parties for many years and it means that neither good news nor bad news can be given out during the period of an election. As I have already explained, in London the purdah period means that the consultation period will be delayed but the proposals will be published early.
	There are two parts of the country where consultation will not begin where it would otherwise have begun during the purdah period; namely, West Yorkshire and Devon. I am hopeful that the Labour Party will do extremely well in Devon, but if you were going to pick and choose somewhere for the reasons that have been suggested, I do not think Devon would be the place.

The Lord Bishop of Southwell and Nottingham: My Lords, in view of the proposal for 500 outreach offices, what is being done about working with places of worship to encourage their possible use as post offices?

Lord Bach: My Lords, that is not directly related to the Question of the noble Lord, Lord Roberts of Llandudno. However, the intention is to open 500 outreach offices as a counter to the closures that may well take place. The right reverend Prelate will know that that will work by sub-postmasters or ex-sub-postmasters going to village halls or church halls for limited periods in order to provide some of the post office services. That programme is going ahead.

Lord Mawhinney: My Lords, may I add to the Minister's level of surprise? My memory says that in eleven and a half years as a Minister, I never recall purdah starting more than six months ahead of an election; nor do I recall political influence being exerted more than six months ahead of an election in order to try to protect the Government from the voters' ire. Why will the noble Lord not just admit that a political decision has been made?

Lord Bach: My Lords, I think the noble Lord is slightly mistaken. The purdah period lasts from 3 April to 1 May; it does not start on 17 December.

Lord Livsey of Talgarth: My Lords, is the Minister aware that Scrooge has come early this Christmas? Post Office Ltd is capping the amount of Christmas stamps allocated to sub-post offices. When I went to buy 200 second-class stamps last week, I was told that there were not any. Post Office Ltd was not allocating any more. Is this a deft way of closing sub-post offices?

Lord Bach: My Lords, that question is best directed to Post Office Ltd. The answer is probably no. My advice to the noble Lord would be to go into Central Lobby and buy his stamps there.

Lord Clarke of Hampstead: My Lords, does my noble friend agree that, regardless of an election period coming along, the general perception of the public in this country is that the consultation procedure is a sham anyway? Will he place in the Library a list of the Crown post offices and sub-post offices that have closed since May 1997?

Lord Bach: My Lords, it is no sham. Following the consultations, Post Office Ltd and the Post Office Users Group look at the results and then the decisions are announced. Some decisions have already been altered as a consequence of that period. This is not a sham at all, but a very difficult process and we are determined to keep a proper network of post offices in the country. This is, I am afraid, part of being in government: you have to take tough decisions. I am not sure that either side opposite is prepared to do that.

Lord De Mauley: My Lords, does not the recent accidental publication on the Government's website of a list of post offices scheduled for closure show, as the Minister's noble friend says, that the Government's so-called consultation is a complete and cynical sham? Was it merely incompetence, or something more sinister?

Lord Bach: My Lords, I hoped that I had answered my noble friend. I have to give the noble Lord opposite the same answer. Consultation is not a sham. If there is evidence of it being a sham, I am sure the noble Lord will let us know.

Zimbabwe: EU-Africa Summit

Lord Hamilton of Epsom: asked Her Majesty's Government:
	What discussions their representative at the European Union-Africa summit had with regard to the situation in Zimbabwe.

Lord Malloch-Brown: My Lords, the noble Baroness, Lady Amos, raised Zimbabwe and the appalling human rights situation during her intervention at the EU-Africa Summit in Lisbon on behalf of the United Kingdom. She also spoke to numerous African leaders at the summit, including President Wade of Senegal, President Mbeki of South Africa and the Tanzanian Foreign Minister, to discuss the situation in Zimbabwe and underline UK concerns. I might add that a discussion on the human rights and governance situation in Zimbabwe in the summit proper was a precondition in allowing President Mugabe a visa for the summit.

Lord Hamilton of Epsom: My Lords, was it not a terrible disappointment that despite these protestations there was actually very little reaction from Zimbabwe? It does not seem to have made any impression whatever on President Mugabe.

Lord Malloch-Brown: My Lords, the noble Lord is correct although I am sure that, like me, he is hardly surprised. President Mugabe has repeatedly shown himself to be immune to the protests of any of us in Europe and blind to the dreadful human rights situation confronting his people.

Lord St John of Bletso: My Lords, will the Minister elaborate on the reported settlement which President Mbeki has facilitated with President Mugabe that outlines the conditions for free and, one hopes, fair elections in Zimbabwe in March next year?

Lord Malloch-Brown: My Lords, the noble Lord will have to accept that it is a little premature to elaborate, because repeated deadlines for the announcement of this settlement have been missed. We are still not aware of its full details, but it is a facilitated negotiation between President Mugabe and the MDC opposition. However, there are still sticking points. The latest word that we have heard is that President Mugabe may not be willing either fully to implement the agreement or to postpone the elections to allow the MDC the opportunity to campaign effectively. We are still awaiting further details. Our hopes will remain unrealised until then.

Lord Avebury: My Lords, in the Strategic Plan 2008-12, the summit agreed to priority action 1 on,
	"Common positions and specific initiatives on key aspects of the governance and human rights agendas".
	What specific initiatives did the summit agree to take against Mugabe in respect of his destruction of the rule of law, human rights and good governance? Is it not the reality that the platitudes of Lisbon held out no hope whatever to the people of Zimbabwe that they will not suffer probably another five years under the yoke of Mugabe?

Lord Malloch-Brown: My Lords, the noble Lord should take some comfort from the fact that there is an EU envoy reporting to the Foreign Ministers, who, like the Heads of Government, realise that when the Mbeki plan is announced, Europe will have to have a position on it and on whether any elections that follow are honest and fair. Europe recognises that if the elections are not fair it will have to ratchet up its pressure on the regime.

The Lord Bishop of Southwark: My Lords, does the Minister think that the cutting up of the most reverend Primate the Archbishop of York's clerical collar live on television as a protest was a helpful gesture?

Lord Malloch-Brown: I certainly do, my Lords; I just wish that I was bold enough to cut up my fine necktie too.

Lord Howell of Guildford: My Lords, I think that we were all hoping for a rather fuller statement from the Government on this EU-Africa summit which appeared to go rather badly wrong, not only with the sinister presence of Mr Mugabe but with the complete misunderstanding about the economic partnership agreements which many people in Africa felt were going to make things worse and not better. We all know very well and greatly admire the noble Baroness, Lady Amos, of course, but what was her precise status at the meeting and what did she actually say? Did she remind Mr Mugabe that 80 per cent of people in his country are unemployed; that four in five of them are living below the poverty level; that famine is spreading; that he has reduced this once rich country to the most appalling misery; and that he is using torture and murder against the opposition? Did she tell him that face to face? If not, is there not more opportunity ahead to be a little more bold and forthright against this horrible man?

Lord Malloch-Brown: My Lords, I share the noble Lord's desire for an opportunity for a fuller discussion of the summit, as I have indicated to him before. However, on his specific question, my noble friend Lady Amos spoke at the summit plenary session on Sunday and used very similar statistics to those that he has just used to lay out unequivocally the country's disastrous economic and human rights situation. There was no ambiguity. Equally, in the opening session, the Chancellor of Germany, Angela Merkel, and the leaders of Denmark, Sweden, the Netherlands and Portugal as well as the President of the European Commission, Mr Barroso, and the High Representative, Mr Solana, all also spoke to the human rights situation in Zimbabwe.

Lord Davies of Coity: My Lords, is my noble friend aware of the report in the Times this morning that the divisions within the Movement for Democratic Change are being overcome and that the movement is more united? As a result, if Robert Mugabe gerrymanders the elections proposed for next year, will our Government be prepared to respond positively to any demand or request made by Morgan Tsvangirai?

Lord Malloch-Brown: My Lords, the Government will stand four-square behind honest and fair elections in Zimbabwe. It is not enough for President Mugabe to agree to a piece of paper as a result of this mediation; he must be seen to change the laws and respect them and to allow genuinely free and fair elections. If those do not occur, we will in no way lessen—rather, we will increase—our objections to the Government of President Mugabe.

Baroness Park of Monmouth: My Lords, can the Minister explain how Zimbabwe can have free and fair elections if no vote is given to the 4 million Zimbabweans in the diaspora? Is there the slightest possibility that, even if that were agreed to, it could be organised by March?

Lord Malloch-Brown: My Lords, as the noble Baroness is no doubt aware, votes for those in the diaspora is one of the conditions on which Morgan Tsvangirai is still insisting. That is one reason—along with other amendments to laws in the constitution that the agreement would require—why he is insisting that the elections should be postponed until June, so that there is time to make the arrangements.

Armed Forces: Territorial Army

Earl Attlee: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I remind the House of my interest as a serving TA officer and apologise for changing the Question at a late point.
	The Question was as follows:
	To ask Her Majesty's Government how many direct-entry Group A Territorial Army junior officers were commissioned in each of the past five years.

Baroness Taylor of Bolton: My Lords, first, I am sure that the whole House will wish to join me in sending sincere condolences to the family and friends of Guardsman Stephen Ferguson who died last Thursday from injuries received while serving in Basra.
	The number of Territorial Army Group A young officers commissioned in each year from 2003 to 2007 was: 95, 87, 39, 49 and 59, respectively.

Earl Attlee: My Lords, I thank the Minister for her reply and for researching the Answer at disproportionate cost and short notice. The Minister could not answer my Written Questions because Ministers did not know how many TA officers were getting commissioned, so how did they know that they were getting enough?

Baroness Taylor of Bolton: My Lords, the Question previously asked by the noble Earl, Lord Atlee, was about commissioning targets, and we answered it. As the noble Earl acknowledged, he changed the Question very late on, and I have today sought to get all the figures for Group A and Group B. There was a particular dip in 2005, but actions have been taken to remedy that and progress is being made.

Lord Addington: My Lords, I associate these Benches with the condolences that have been expressed. How do the Government regard the TA's role, especially its commissioned branch, in supporting the Army in these times of conflict?

Baroness Taylor of Bolton: My Lords, the TA has played a very significant role in supporting and operational activities in both Afghanistan and Iraq. There have been 10 TA deaths since 2003. The role that the TA plays is extremely well-valued and its expertise is important to our armed services.

Lord Ramsbotham: My Lords, I am glad that the Minister used the word "significant" to represent what the TA means to the Army and, indeed, to the country. I am sure that she is aware that one of the key factors in obtaining people for the TA is the important relationship with employers, so that they are prepared to release people in order to serve. That relationship has been described as a "profitable partnership". Clearly, the very depressing numbers which the Minister has given suggest that employers are not so willing to let people go. Are the Government prepared to consider ways of encouraging employers by, for example, as was suggested some years ago, relieving them of their part of the national insurance contribution for those people they release to serve in the TA?

Baroness Taylor of Bolton: My Lords, I understand that two organisations are very helpful in this respect: SaBRE, which supports Britain's reservists and employers, and the National Employer Advisory Board. As I understand it, the relationship between the Ministry of Defence and those organisations has proved very positive. We do not think that there are significant difficulties in employers putting up barriers to people undertaking their responsibilities but, obviously, it is always important that we should be open to new ideas and suggestions.

Lord Astor of Hever: My Lords, we on these Benches also send our condolences to the family and friends of Guardsman Ferguson. My noble friend Lord Attlee is absolutely right to continue to pursue this question, particularly at a time of increasing use of the reserves. Do the Government accept that the short notice given for the mobilisation of many TA soldiers has contributed in the drop in the numbers able to make the commitment to TA service?

Baroness Taylor of Bolton: No, my Lords, I do not think that that is the difficulty. In fact, there are 3,084 reservists on operational duty at the moment. Overall, 14,000 Territorial Army people have been involved in operations since 2003. Those numbers are holding up; indeed, recruitment at the officer level, which is the original starting point of this Question, has improved recently.

Lord Hamilton of Epsom: My Lords, does the Minister not accept that the TA has always been a poor relation with regards to funds from the Ministry of Defence and that very often regular units take priority over the TA? Is it not time that we had a totally separate budget under a different department that would pay for the TA and increase its numbers as a reserve for civilian contingencies as well as military ones?

Baroness Taylor of Bolton: My Lords, that is not an argument that I have heard used by anybody involved in this matter or briefing me on it, but obviously I shall look into it. With regard to training, there have been attempts—and I think successful attempts—to ensure that the training given to officers in the Territorial Army units is more comparable to that given to other officers. So the comparability is actually improving.

Lord Elton: My Lords, the Minister said that the late announcement of mobilisation was not a factor discouraging enrolment. What does she consider the factors are, and what are the Government doing to counter them?

Baroness Taylor of Bolton: My Lords, the low point was 2005. At that time, new training arrangements were put in place and the commandant of the Royal Military Academy at Sandhurst got control of all the training. Since then, further improvements have been made in recruitment activities, including more open days, more access to information on the web and things of that kind. That might be one reason why we have seen an upturn in uptake recently.

Earl Attlee: My Lords, it seems to me that the MoD is trying very hard to solve this problem, but what more can be done to encourage parents of potential junior officers? Sometimes I think that they may be the stumbling block.

Baroness Taylor of Bolton: My Lords, the Command Paper that my right honourable friend the Minister for the Armed Forces is putting out, together with the work that is going on to ensure that everybody in the country is more aware of the contributions to the Armed Forces, may help in that respect.

Business

Lord Grocott: My Lords, with permission we shall have two Statements repeated this afternoon, which we shall take at a convenient time after 3.45 pm. The first is on the European Council and will be repeated by my noble friend Lady Ashton. The second is entitled "HM Revenue and Customs Data Loss" and will be delivered by my noble friend Lord Davies of Oldham.

European Communities (Definition of Treaties) (Agreement on Enlargement of the European Economic Area) Order 2007

Baroness Royall of Blaisdon: My Lords, I beg to move the Motion standing in my name on the Order Paper.

Moved, That the draft order laid before the House on 15 November be approved. 3rd Report from the Statutory Instruments Committee, Considered in Grand Committee on 13 December.—(Baroness Royall of Blaisdon.)
	On Question, Motion agreed to.

Financial Assistance Scheme (Miscellaneous Amendments) Regulations 2007

Lord McKenzie of Luton: My Lords, I beg to move the Motion standing in my name on the Order Paper.

Moved, That the draft regulations laid before the House on 20 November be approved. 3rd Report from the Statutory Instruments Committee, Considered in Grand Committee on 13 December.—(Lord McKenzie of Luton.)
	On Question, Motion agreed to.

Climate Change Bill [HL]

Lord Rooker: My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved accordingly, and, on Question, Motion agreed to.
	House again in Committee on Clause 4.
	[The LORD SPEAKER in the Chair.]

Lord Redesdale: moved Amendment No. 22:
	Clause 4, page 3, line 6, after "budget")," insert—
	"(aa) to set a target for the reduction in the net UK carbon account over a 12 month period every 12 months,"

Lord Redesdale: I shall speak also to Amendments Nos. 76, 144, 150 and 154 in my name and that of my noble friend Lord Teverson. I should also like to associate myself with Amendment No. 31 in the name of the noble Lord, Lord May of Oxford.
	The purpose of the amendments is quite clear: they would set annual targets. The purpose of the Bill is to reduce the level of carbon dioxide emissions into the atmosphere. The Government have talked about five-year targets and they were not persuaded of the need to support our amendments for three-year targets. Indeed, I have a sneaking suspicion that they may not support these amendments because of a few well-judged words at the end of the first Committee day. However, will the noble Lord, Lord Rooker, answer a question which is at the heart of the Bill? If we do not set annual targets, is there any point in the Bill at all? A five-year target could quite easily be missed and, if we are to follow the scientific evidence that has been so ably demonstrated by many Members of the Committee who have spoken about the science behind this issue, and 10 years' time will be the point of no return at which irreversible climate change will have taken place, the first few targets are incredibly important.
	As we all know, there will be slippage because when policies are put in place they suffer from implementation stages, planning stages and so forth. As we have seen in the past, there can be a major difference between the levels of emissions on a yearly basis depending on whether there is a cold winter or a change in the spot price of gas, which means that companies move from gas power stations to mothballed coal power stations. That would have a major impact on any budget set by the Secretary of State.
	The other point is that many Secretaries of State will not last the full five years. It is my conjecture that most will not last the full year, although that is probably just on past form and shows that I am quite cynical. However, it is important that each year target gives each Secretary of State his own individual stamp to ensure that the policy is being adhered to.
	The most important aspect of all of this is that, if we are serious about reducing the amount of carbon dioxide, we must do so as early as possible. Each year that we do not reduce carbon dioxide is adding to the greater total and therefore the carbon dioxide will be in the atmosphere for a longer period. It would be great if further along we had reduced the amount of carbon dioxide, but there would still be an interest rate of carbon dioxide in the atmosphere that had built up at this end of the curve.
	The Minister will probably say that there are excellent reasons why this should not be adhered to because it would put a straitjacket on ministerial policies. However, he may have a slight difficulty with that partly because of the bravery of the Government in introducing the Bill into this House first. I am sure that an amendment carried by this House would be extremely popular in another place and in the country. We should not forget that the Government say that they listen to consultation. If decisions are taken on that basis I am surprised that this provision is not in the Bill already, because 16,292 of the respondents to consultation called for annual targets. That is out of the 16,919 people and organisations who dealt with the consultation.
	Added to that, it might be the will of the other House not to agree to an amendment. However, an EDM in the other place earlier in the year on this issue was signed by 412 Members. My mathematics is slightly rusty, but that does give a fairly large proportion of Members of the House of Commons who might well welcome any amendment to the Bill that deals with annual targets. If we want to stick to the five-year targets, it is incredibly important that we do not forget that the five-year targets that the Minister was arguing for were set out so that we can dovetail into the ETS system. But from next year, the ETS system will be working on a completely different timescale. I hope that the Government will come forward with positive reasons why they are rejecting this amendment and perhaps with notice of amendments of their own that they intend to bring in to introduce the milestones. I believe that introducing the Bill, which we all support, without milestones makes the Bill fundamentally flawed in its objective of achieving annual reductions—leading to the massive reduction of between 60 and 80 per cent at a later date. I beg to move.

The Earl of Caithness: I support the amendment moved by the noble Lord, Lord Redesdale. On the first day in Committee, the noble Baroness, Lady Morgan, gave us advance warning of what she was going to say in answer to these amendments. She said:
	"It is worth recalling that each of the parliamentary committees that scrutinised the Bill agreed that binding annual targets were not suitable".—[Official Report, 11/12/07; col. 221.]
	I question that. The Environmental Audit Committee said in paragraph 118 of its report that,
	"the Government should still set out an indicative target for UK emissions in each year, so as to apply continual pressure to reduce emissions".
	The Environment, Food and Rural Affairs Committee, in paragraph 51 of its report, said that,
	"we recommend that clear annual 'milestones' are set—and published—by the Committee on Climate Change in order that it may become apparent well before the end of a budgetary period whether or not policies are working".
	The Joint Committee on which I served, in paragraph 69 of its report, said:
	"We recommend that, in setting the level of future budgets, the Government should also provide indicative annual milestones to help assess progress on an annual basis".

Lord Taylor of Holbeach: I take a slightly less pessimistic view on this issue than the noble Lord, Lord Redesdale. I hope that the Government may indeed have discovered the virtue of milestones on their road to Damascus. I am going to speak in support of these amendments, which have general support from these Benches. They attempt to make targets more accountable. Although strengthening accountability and removing the politics from the efforts made to meet emissions targets are central components of our approach to this Bill, we maintain that our amendments, which will follow in a later group of amendments, are a better way of ensuring that this is the case.
	Five-year budgets are robust enough in terms of science, but they are not robust enough in terms of politics. A five-year period allows Governments to blame their predecessors for failing to reach targets themselves, potentially locking us into a situation where each Government blame their predecessor for failing to reach the target and nobody actually takes responsibility for meeting reduction targets. If we want the Bill to have any teeth—I am sure the Committee is agreed that that is what we are seeking—there needs to be a mechanism to ensure that Governments do indeed take responsibility. We need annual markers to pin the project firmly to Governments' annual agendas. Again, I emphasise that the purpose of the Bill is to drive across government departments a common agenda to achieve the Bill's objectives.
	Our amendments on annual targets, which make up the next group, propose rolling annual targets, which offer a more realistic way to achieve the desired results of increased accountability. Having rolling targets means that the targets would be set according to an annual rolling review, looking five years ahead, allowing the committee, the Secretary of State and Parliament to tilt targets according to progress made every year, while avoiding the possibility of any Government simply shunting responsibility on to their successors. The Liberal Democrat proposals do not have a rolling factor, which means that their static milestones simply have commitments within the five-year periods without any mechanism to see how that will affect whether we will meet the target, or to see what impact success or failure has had on what the budget should be for the next five years. Our rolling targets are therefore much more adaptable.
	We understand that all manner of thing that might not be under a Government's control can influence one year's carbon account, which we anticipate to be the Government's reason for not accepting the amendments. We know that extraneous factors come into play. However, the flexibility allowed for in rolling targets ensures that measures can be drawn up to make up for years when there are colder winters or other such variable phenomena. That also ensures that, should one year be a success, the Government do not rest on their laurels. That places more of a concerted burden on the Government to address climate change every year and across all departments, and I hope that the Government do not shy away from such a responsibility—or the opportunity to make a success of this legislation. Perhaps the Minister should be comforted by the fact that we fully intend to be the Government who present the first five-year report to Parliament. Notwithstanding that, we know that we have support outside this House, from Friends of the Earth, for more flexible, rolling targets' arrangements.
	I should like to talk about the publication of targets, because that too forms part of the proposals. One of the primary virtues of annual targets is that they provide a mechanism to assess the success of a Government's efforts at reducing carbon emissions. Thus we recognise the importance of having procedures for reporting on the success or failure of meeting the targets, and support their inclusion in the Bill. It is important not only whether the targets in question are met, but that some indication is given why they have or have not been and what is to be done about it.
	I looked around earlier—this was why I did not speak immediately after the moving of the amendment—to see whether the noble Lord, Lord May, was in his place, because I rather hoped that we would have the opportunity to hear directly from him. However, having temperature correction as part of the reports on annual milestones seems to these Benches like a sound idea if their purpose is to provide the most accurate measure of our progress in meeting our commitments to stop climate change. One abiding problem for us on these Benches has been that the Bill provides moments when there is potential wiggle room for Ministers not meeting targets. It is imperative that we know where we stand in relation to the great problem that faces us. Thus any procedure that takes into account the many variables that might otherwise lead us to an incorrect conclusion or assessment is to be welcomed. That is part and parcel of our plan to have a more robust Bill and more robust mechanisms to monitor our progress, such that we have robust ways to solve the problem.
	To conclude, all three parliamentary committees that have considered this proposal, having scrutinised the draft Bill, recommended annual milestones in one form or another. Why have the Government excluded those milestones, and with which aspect of them do they find it difficult to come to terms? Can an argument be made for not having something in this clause of the Bill to make it as robust as possible?

Lord Crickhowell: I first apologise to the Committee for not having been present on its first day as I was in Moscow with Sub-Committee C of the EU Committee. I return with an even worse cold than when I went, so I hope that the Committee will forgive me if I end up croaking for the rest of the evening.
	I was on the Joint Committee along with my noble friend Lord Caithness. There, we supported the system of five-year budgets but strongly recommended the setting of indicative annual milestones. For much the same reasons as my noble friend, I looked with some doubt at Amendment No. 22, which was moved by the noble Lord, Lord Redesdale. It is ill-defined and it does not really say how it would fit into the budget system, except that the noble Lord repeated that his party does not, in any case, believe in five-year budgets. I was, therefore, pleased to read my noble friend's amendment on my return from Moscow, as that seems greatly superior.
	However, like my noble friend Lord Taylor, I was extremely interested in Amendment No. 31, in the name of the noble Lord, Lord May of Oxford. I am sorry that he is not with us because that amendment contains a number of extremely constructive propositions. It would thus be very helpful. As this debate will not lead us to a final conclusion, we will clearly have to return to it on Report when we have heard what the Government say. However, I hope that they will give careful consideration to the points made in the amendment from the noble Lord, Lord May of Oxford, along with those from my noble friend, as those points form the foundation on which we could produce a better solution than the Bill presently contains.

Lord Rooker: I make it clear at the outset that we are not afraid of being held accountable for each year of progress that we seek to make. Furthermore, the Government have absolutely no control over about 50 per cent of emissions from the UK economy, yet nobody seems to take any account of that in how we are to measure these things and to be accountable.
	In reply to the noble Earl, Lord Caithness, the point that my noble friend referred to on 11th December was that references to binding annual targets were not suitable. I am not arguing about what any of the scrutiny committees have said, but none of them came forward to require such targets. However, they looked at other aspects of this important issue, and we do not seek to run away from it. We think that the Bill has strong mechanisms—we will come to them in Clauses 28 and 29—to make sure that the government of the day are, importantly, annually held accountable to Parliament, on the basis of the expert and independent assessment of the Committee on Climate Change. The independent scrutiny that that will provide, on an annual basis, will strengthen the accountability for achieving emission reductions each year in every five-year budget. Therefore, we are not seeking to have the issue swept away for five years with no scrutiny and nothing done about it.
	If the Committee on Climate Change reports that, in its expert view, the UK is not on track to meet the budget, we would expect the Government to do everything possible to get back on track so as to satisfy the committee—and, moreover, to be under intense pressure in Parliament and in the court of public opinion. That is absolutely crucial. Annual scrutiny will help raise expectations that concerted action will be taken throughout each budget and, it is hoped, increase the confidence that the budgets will be met. We remain opposed to annual milestones or targets because we do not think that they would work in practice. I want to give four reasons and some detail as to why that is the case, because it is important for the next stage.
	First, there are annual natural fluctuations. Emissions go up or down by a small amount each year, depending on the weather. The noble Lord, Lord Redesdale, recognised that point in moving the amendment. During a five-year budget period, the fluctuations will, or are expected to, average out. We also have to ask ourselves whether proposals for annual milestones or targets will help the credibility of the system that we are setting up under the Bill. Would it help to have a debate each year on why the UK was, say, 0.2 per cent above or below its annual milestones and whether this was because the Government were doing well or because the weather was abnormally warm or cold that year? Such a debate would be irrelevant.
	Secondly, annual milestones and the political pressure to meet them could lead to huge pressures to rush through costly policies in a year, or particularly late in a year, with the aim of achieving short-term emissions reductions to ensure that targets were met. However, those policies might not be sensible from the economic, social or environmental points of view and could prove to be a distraction from the long-term decisions that need to be taken to put us on a trajectory to the 2020 targets and beyond. For example, would the Government of the day be expected to put up the cost of heating fuel in October to help to meet our annual targets? If not, what alternative measures could be taken late in a year to try to meet the milestones? One has to look at this from the practical point of view of the sequence of when information on which to judge performance becomes available. This would be the case even if there were no obligations on the Government to meet annual targets—in other words, if the targets were merely indicative. The same argument would apply regardless of whether the targets were set milestones or were legally binding.
	Thirdly, even if the Government of the day wanted to set annual milestones, they would simply not have enough information on which to base a decision. Even with the best will in the world, definitive information on emissions in a given year is not available until well after the year ends, as I think noble Lords will accept. The Government of the day would learn that they were off track for a given year only when it was already too late to do anything about it, unless it were the Government's intention to buy credits each year. I am sure that such an issue would be controversial, bearing in mind the reference to it during our first day in Committee.
	Finally, as I pointed out, proposals for annual milestones do not recognise that the Government have no control of the annual emissions from 50 per cent of the UK economy. The European Union Emissions Trading Scheme covers half the UK's CO2 emissions, including sectors that are more responsive to price signals. However, within the European trading system, companies are completely free to phase their emissions however they like during the five-year period. It is simply not possible for the Government to influence this and decisions will be based more on the carbon price across Europe. Again, how would that be taken into account in assessing our progress against the milestones?
	These are not intellectually stunning arguments against the principle; each one is a practical concern if we are to legislate for scrutiny. Those who are scrutinising the Government, here or elsewhere, will want something that they can genuinely measure the Government's performance against. These are practical issues that I bring to the Committee.
	Perhaps I may make a couple of points about other amendments in the group. Amendment No. 76 would require the Government to "have regard to" their annual statement of emissions, provided for in Clause 12, when setting the indicative annual targets. There would be a serious practical difficulty with that. Final emissions figures are available on 15 January—one year and 15 days after the end of the year in question. Final detailed figures are available on 15 March. The information required would simply not be available in time. I realise that that is not an argument for doing nothing or for not having annual scrutiny, but I am making a practical point about how you change what has happened in one year and how you account for it.
	I have a couple of paragraphs on the amendment tabled by the noble Lord, Lord May, which I think are worth using, even though the noble Lord is not here. Obviously colleagues will take this away and have a look at it for Report. Amendment No. 31 would help by providing additional information on the causes of any fluctuations in annual emissions. We sympathise with the noble Lord in his efforts to address a problem that is not addressed in the Liberal Democrat proposals or in the group of Conservative ones to which we shall come shortly. However, we are not convinced that the proposals of the noble Lord, Lord May, would entirely address the problems. They would help but they would not entirely address them. There might simply be a new debate about the accuracy of the methodology used in adjusting emissions to take account of temperature fluctuations. The amendment would also not address the other, practical problems of the annual milestones that I have set out.
	As I said, we are not at all afraid of being held accountable for each year of progress, but that has to be done in a practical way. Those who are checking on the Government need a target or a figure or a means of scrutinising, so that it is not just a case of them saying each year, "We wish you had done better", and the Government saying, "Haven't we done really well?". They have to be measured against something. That cannot be done in the way proposed by this group of amendments.

Lord Taylor of Holbeach: Perhaps I may come back to the argument. I know that I am going to have an opportunity to talk again on the annual milestones, but there is an inconsistency in the Minister's arguments. He talked about a last-minute flap to put up heating costs in order to reduce emissions for the forthcoming winter and later he said that he thought that these annual milestones would not be much use because it would be too late to do anything about it by the time it was found out that they were being strayed from. The key is that we are looking at an arrangement that is designed to be indicative; any annual report is bound to centre around the degree to which the Government feel that they are on track for achieving their five-year target. We really need an annual progress report based on some sort of annual milestone target.
	I understand that much of economic and emissions activity is outside the direct control of the Government. That is why this Bill is such a challenge. The Bill is not just about what Governments do directly; it is about what they manage to persuade the rest of the economy—the rest of our nation—to do. I find it difficult to understand why the Minister is shying away from something that would help the Government and strengthen the Bill. We are going to need every weapon that we have to keep people focused on the issue in hand. There will be all sorts of sidetracking. Mild winters, cold summers or volcanic eruptions can all throw these predictions off track. None the less, I would have thought that to have something that you can refer to and use in the annual report would be greatly to the advantage of the Government and I am surprised that the Minister is not taking a more positive approach to this idea.

Lord Teverson: If we do not have indicative targets—let us be clear, none of us is asking for statutory targets—the world at large, the scientific community and the political world will simply take the gap between the beginning of the budget period and the end and divide it by five, and the Government will be judged on that. It will be far more intelligent, far more practical and far better if the Committee on Climate Change, or whatever mechanism is finally put in place, makes evidence-based decisions beforehand. Simple mathematics will probably not work and will probably do the Government of the day more harm. It will be much better to do things in a planned way.

The Earl of Caithness: I was struck by the Minister's response because it seemed to be a very good argument for not having any budgets at all. If the Government have control of less than 50 per cent of the carbon account, what will they do at the end of year 4&frac34;? The Secretary of State will have to put up the price of oil or whatever, and it will not matter whether it is in year 4, year 3 or year 1. What came out of the discussion was that there must be some form of stepping stone so that we can see how the trend is going. There is no doubt that the evidence that we had in the committee was strongly in favour of that. Can the Minister confirm that the emissions results currently published by the Government already take account of hot and cold years so that it is possible to make a comparison? Given the trend and provided that there is transparency in all the figures, the variation between a warm year and a cool year is not so relevant now.

Lord Dixon-Smith: One of the joys of Committee is that we have an opportunity to have two or three goes at a particular subject. I urge the Minister to take this matter away to see whether he can be a little more flexible. I am quite prepared to accept that he may not currently have a reporting mechanism in place that will allow him to produce the figures quickly, but it really is not good enough to say that we cannot put such a reporting system in place. It is nonsense to say that we cannot deal with this matter because we will not have the figures for another 12 months or so. We are in an age when, if I read my financial press correctly, many major companies, some of which operate on an international basis, report their results quarterly. If we can require that of major international corporations, we should be able to require it of energy suppliers in this country.
	It does not particularly matter which energy system is used to supply energy to the final customers. Coal has an immediate carbon equivalent and, if coal is consumed, its carbon equivalent can readily be calculated. Oil and gas also have carbon equivalents, but of course we know that wind does not produce carbon dioxide at all. So I believe that the energy suppliers should be required to report regularly what they have supplied. It would not matter whether they were within the European trading system, although I accept that the Government could not regulate them in the same way if they were within that system. None the less, the companies supply a commodity with a carbon consequence that can be measured, and that can be reported.
	We may need to think about other schemes—I think that the Minister has more resources for thinking about that sort of thing—but we should put a reporting mechanism in place. I was more prepared to intervene in relation to my noble friend's amendments, which we will come to but which we seem to be debating with this group, but I agree with noble Lords on the two opposition Front Benches that it would be enormously helpful to have an annual record of the position and an annual target.
	Of course, there are all sorts of other difficulties. For most of the first five years, the legislative and regulatory background and the financial incentives background will be those that exist at present. Current evidence suggests that energy consumption is not immediately price-related. The price of oil has gone up by a terrific amount over the past couple of years, as has the price of energy. Unsurprisingly, so far as I can see, the volume of energy has not retreated in the face of that price attack, so, in my view, the idea that price changes will have a great effect on customers, as one or two speakers implied earlier in the debate, is simply not borne out by the practical evidence.
	However, we have to find mechanisms to make this scheme work. There is no doubt that annual targets within a five-year budgetary period would be enormously helpful in knowing what is going on. It would be perfectly possible to put in place a reporting system that would make this achievable. I beg the Minister to take this matter away and look at it seriously.

Lord Rooker: I was far too subtle or modest when I responded to the debate; I hid my argument. I flagged up the fact that there is an annual reporting framework in Clauses 28 and 29. We will certainly take away this issue and what has been said this afternoon to see whether we can find a mechanism to improve the reporting accountability set up in those clauses. That would be the right place to do it, but it is a question of finding a mechanism.
	Frankly, I am sitting here thinking that in perhaps five years' time I will want an annual target to screw a Minister to at this Dispatch Box and that it is much better to get it done now than to be arguing then. There is an annual reporting framework in Clauses 28 and 29—we may get to those clauses today, although that is subject to progress. We will certainly take this matter away, but I cannot give a commitment. We will come back on Clauses 28 and 29 to see whether we can build in a better reporting system for annual accountability to the House.

Lord Redesdale: Before I thank the Minister for that response, I should say that the purpose of this amendment was not to hold the Minister to account for political gain. The issue on all sides of the Committee is that this is a complicated process. The Minister said that 50 per cent of carbon dioxide is outside the Government's remit, but that is one of our major problems with the Bill. When people talk about emissions, they often mean emissions just from electricity, but there are emissions from agriculture, such as methane from sheep and land usage. There are major issues, but I dispute what the Minister said about their being completely outside the Government's control, because, if we are looking at a 60 to 80 per cent target, certain things will not be outside the Minister's control. That goes back to an earlier debate: if we are looking at a third runway at Heathrow, at what point does the massive amount of emissions that will come from that third runway feed in to this debate and who makes the decision? If it is just the Secretary of State at Defra, that will be a real issue.
	We have not moved this amendment on a political basis, although I have been lobbied by vast numbers of people who have written wonderful letters to me, saying, "Dear Lord Redesdale, You're taking part in the Climate Change Bill. Can you make it stronger? Thank you very much". That is a fine form of lobbying. It seems that we are moving forward. We are not wedded to the wording in the amendments that we have tabled; there is value in the amendments tabled by the noble Lord, Lord Taylor, and it is unfortunate that the noble Lord, Lord May, is not here to debate his amendment, which I hope he will bring back another time. However, the Minister said that he might well look at this again and that some form of compromise can be reached and introduced into the Bill before the next stage. That is a very welcome position. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Morgan of Drefelin: I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.
	House resumed.

European Council: 14 December 2007

Baroness Ashton of Upholland: My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Prime Minister.
	"With permission, Mr Speaker, I would like to make a Statement about the European Council held in Brussels on 14 December, which focused on two major concerns: the reforms Europe must make to meet and master the global challenges we face for competitiveness, employment, secure energy and climate change and issues of security, in particular Kosovo, Iran and Burma, that we must confront together. "I start with the most immediate concern facing the summit: the best way to bring about a satisfactory resolution to the status of Kosovo. Kosovo is the last remaining unresolved issue from the violent break-up of the former Yugoslavia. In the light of the recent failure by the parties in the troika process to find a negotiated way forward, the European Council accepted its responsibility for joint European action and agreed the importance of moving urgently towards a settlement. It is to the credit of all parties in the dispute that even when faced with conflicting positions, the region remains at peace. And, as the European Council conclusions noted, it is essential that this commitment to peace is maintained. "The principles of our approach are, first, that Europe takes seriously its special responsibility for the stability and security of the Balkans region. Indeed, it is thanks to the sustained efforts of NATO troops and the diplomacy of the United Nations and the European Union that a safe and secure environment has been maintained. But, secondly, we were agreed that the status quo was unsustainable and that we needed to move forward towards a settlement that ensures what we called a,
	'stable, democratic, multi-ethnic Kosovo committed to the rule of law, and to the protection of minorities and of cultural and religious heritage'.
	And, thirdly, after a detailed discussion at the Council, we were also wholly united in agreeing that European engagement should move to a new level. We agreed in principle and stated our readiness to deploy a European Security and Defence Policy policing and rule-of-law mission to Kosovo. This will consist of a multinational mission of around 1,800 policemen and judicial officials. I can confirm that the UK will contribute around 80 of these, including its deputy head, Roy Reeve. European Foreign Ministers will confirm the detailed arrangements for this mission shortly. "Fourthly, we also reaffirmed that a stable and prosperous Serbia fully integrated into Europe is important for the stability of the region. The Council encouraged Serbia to meet the necessary conditions to allow signature of its stabilisation and association agreement and expressed our confidence that Serbia has the capacity to make rapid progress subsequently towards candidate status. Indeed, the conclusions of the meeting of European Foreign Ministers last week reiterated the European Union's support for enlargement more generally, and we also look forward to recognising the progress made by both Croatia and Turkey at this week's accession conference in Brussels."The UN Security Council will discuss the issue of Kosovo with representatives from both Belgrade and Pristina on 19 December with the aim of giving Russia an opportunity to accept a consensus on the way forward. If this proves impossible, we in Britain have always been clear that the comprehensive proposal put forward by the UN special envoy, Martti Ahtisaari, based around the concept of supervised independence for Kosovo, represents the best way forward. And while we are rightly focused on the immediate priority of bringing the status process through to completion in an orderly and managed way, the European Council agreed that it is also important that we address the longer-term challenge of ensuring Kosovo's future economic and political viability. I welcome the commitment made by the European Union to assist Kosovo's economic and political development. Planning is now under way for a donors' conference to follow shortly after a status settlement. "The Council also discussed Iran and there was agreement on a united European approach. Here again, the power we wield working with all the EU is greater than if we acted on our own. As I have made clear repeatedly, Iran remains in breach of its international obligations. In September, Foreign Ministers from the E3+3 agreed that until there were positive outcomes from Javier Solana and the International Atomic Energy Agency's discussions with Iran, we would seek tougher sanctions at the United Nations. The latest E3+3 assessment is that sufficient progress has not been made. "The European Council conclusions call on Iran to provide full, clear and credible answers to the IAEA and to resolve all questions concerning its nuclear activities. The European Council reiterated its support for a new UN resolution as soon as possible. In addition, we agreed to decide on new measures that the EU itself might take to help resolve this situation at the January meeting of Foreign Ministers. These should complement UN measures or substitute for them if the Security Council cannot reach agreement."Iran has a choice—confrontation with the international community leading to a tightening of sanctions or, if it changes its approach, a transformed relationship with the world from which all would benefit."As set out in the Council's conclusions, the EU also reaffirmed its deep concern about the unacceptable situation in Burma, and makes clear that if there is no change in the Burmese regime's approach to political negotiations and basic political freedoms, we stand ready to review, amend and—if necessary—further reinforce restrictive measures against the Burmese Government. The Council also reaffirmed the important role of China, India and the Association of South-East Asian Nations in actively supporting the UN's efforts to establish an inclusive political process leading to genuine national reconciliation."For our part, we believe that the forthcoming visit of the UN envoy—Professor Gambari—is critical. It is essential that the Burmese Government meet the demands set out in the UN Security Council statement of 11 October to: release all political prisoners; create the conditions for political dialogue, including relaxation of restrictions on Aung San Suu Kyi; allow full co-operation with Professor Gambari; address human rights concerns; and begin a genuine and inclusive process of dialogue and national reconciliation with the opposition."In particular, the regime should respond to the constructive statement of Aung San Suu Kyi of 8 November and open a 'meaningful and timebound dialogue' with the opposition and the country's ethnic groups."The Council also agreed that a key part of the EU's external agenda is how we can—by working together—maximise our influence in tackling global poverty. The Council agreed that the European Commission should report by April next year—half way to 2015—on how the European Union is meeting its commitments to the millennium development goals, and how we can accelerate our progress. "In addition to these issues of international security and development, the Council conclusions and the special declaration on globalisation also set out the challenges that the European Union must now address on globalisation."First, we agreed to maintain our focus on economic reform, with a renewed focus on modernising the single market so it enhances the European Union's ability to compete in the global economy. We must have full implementation of the services directive by 2009 and we must continue to work together towards further liberalisation in the energy, post and telecoms markets—where market openings could generate between €75 billion and €95 billion of potential extra economic benefits and create up to 360,000 new jobs. Investment in research, innovation and education—and removing barriers to enterprise—are also essential."Secondly, we confirmed our commitment to free trade and openness. The priority is securing a successful outcome to the Doha trade round, which would deliver gains to the global economy approaching $200 billion by 2015, equivalent to 0.6 per cent of global income and bringing significant benefits to rich and poor countries alike. We will also promote better EU-US trade links."Thirdly, we agreed to do more to develop mechanisms for co-operation within the European Union and with countries across the world to tackle security challenges like terrorism, illegal immigration and organised crime. We renewed our commitment to the EU counterterrorism strategy and to co-operate on counter-radicalisation work."Fourthly, we will work together to deliver our commitments to tackle climate change, including the target of reducing emissions by 20 per cent by 2020, or 30 per cent as part of an international agreement. And building on the significant progress made last week in Bali—an agreement on which the Environment Secretary will report to this House tomorrow—we must help negotiate an ambitious post-2012 international climate change agreement. And Europe must also now step up funding, including through the World Bank, to help the developing world shift to lower carbon growth and adapt to climate change."It was agreed at the last Council meeting that the presidency would bring forward a proposal for a new reflection group. This was announced in October. At this later meeting, the Council invited Mr Felipe González Márquez, assisted by two vice-chairs, Mrs Vaira Vike-Freiberga and Mr Jorma Ollila, chairman of Shell and Nokia, to,
	'identify the key issues and developments which the Union is likely to face in 2020 or 2030 and to analyse how these might be addressed'.
	The remit specifically states that,
	'it shall not discuss institutional matters. Nor should its analysis constitute a review of current policies or address the Union's next financial framework'.
	It will report back to the Council, which will decide how to follow up its recommendations. "I can also tell the House that today we are publishing the European Communities (Amendment) Bill, which contains the institutional changes to accommodate a Europe of 27 members and will include the safeguards that we have negotiated to protect the British national interest: the legally binding protocol that ensures that nothing in the Charter of Fundamental Rights challenges or undermines the rights already set out in UK law and that nothing in the charter extends the ability of any court—European or national—to strike down UK law; legally binding protocols that prescribe in detail our sovereign right to opt in on individual justice and home affairs measures, where we consider it to be in the British interest to do so, or alternatively to remain outside if that is in our interest; a declaration that expressly states that nothing in the new treaty affects the existing powers of member states to formulate and conduct their foreign policy, and that the basis of foreign and security policies will remain intergovernmental, a matter for Governments to decide on the basis of unanimity; and an effective veto power on any proposals for important changes on social security, so that when we, Britain, determine that any proposal would impact on an important aspect of our social security system, including its scope, cost or financial structure, we can insist on taking any proposal to the European Council under unanimity."With the publication of the Bill that legislates for the amendments to the European Communities Act, Parliament will now have the opportunity to debate this amending treaty in detail and to decide whether to implement it. We will ensure sufficient time for debate on the Floor of the House, so that the Bill is examined in the fullest of detail and all points of view can be heard. That will give the House the full opportunity to consider this treaty, and the deal secured for the UK, before ratification."In addition, I can tell the House that we have built into the legislation further safeguards to ensure proper parliamentary oversight and accountability. To ensure that no Government can agree, without Parliament's approval, to any change in European rules that could in any way alter the constitutional balance of power between Britain and the European Union, there is a provision in the Bill that any proposal to activate the mechanisms in the treaty that provide for further moves to qualified majority voting, but which require unanimity—the so-called passerelles—would have to be subject to a prior vote by the House. In the event of a negative vote, the Government would refuse to allow the use of the passerelle. The Bill also includes a statutory obligation that any future EU amending treaty, including one that provided for any increase in the EU's competence, would have to be ratified through an Act of Parliament. So Parliament would have absolute security that no future change could be made against its wishes."I said in October that I would oppose any further institutional change in the relationship between the European Union and its member states, not just for this Parliament but for the next. I stand by that commitment. This is now also the settled consensus of the European Union. All 27 member states agreed at the Council—as expressly set out in the conclusions—that this amending treaty provides the Union with a stable and lasting institutional framework and that it completes the process of institutional reform for the foreseeable future. The conclusions of the Council state specifically that the amending treaty,
	'provides the Union with a stable and lasting institutional framework. We expect no change in the foreseeable future'.
	"Finally, let me conclude with the discussion on the most immediate economic issues: concerns about the economic consequences of the global financial turbulence that started in America in August. The Government's first priority in the coming weeks is to ensure the stability of the economy and to have the strength to take the difficult long-term decisions necessary. The Council agreed that the whole of the European Union must now turn its attention both to the immediate measures necessary and the long-term strengthening of international capacity to secure greater financial stability. The announcement made earlier this week by central banks in the major financial centres that they will provide liquidity to ease tension in the financial markets must now be built upon. As we agreed, supervisory authorities in different countries need to co-operate effectively across borders in exchanging information and in the management of crises and contagion."The European Council conclusions emphasised that macroeconomic fundamentals in the EU are strong and that sustained economic growth is expected. But we concluded that continued monitoring of financial markets and the economy is crucial, as uncertainties remain. The Council underlined the importance of work being taken forward both within the EU and with our international partners to improve transparency for investors, markets and regulators; to improve valuation standards; to improve the prudential framework, risk management and supervision in the financial sector; and to review the functioning of markets, including the role of credit-rating agencies. "The European Council will discuss these issues at its spring 2008 meeting on the basis of a progress report by the Finance Ministers Council and by consideration of the financial stability forum's work to date. As agreed by Chancellor Merkel, President Sarkozy and myself in October, the progress report should examine whether regulatory or other action is necessary. I have invited Chancellor Merkel and President Sarkozy to London so that we can discuss the proposals in the paper we agreed and issued a few weeks ago. The measures are important to strengthening the international community's role in addressing financial turbulence across the world, showing the importance we attach to taking the tough long-term decisions to ensure, in testing times, the stability of the economy. "Mr Speaker, the conclusions of the Council state specifically that in the institutional framework we expect no change 'for the foreseeable future'. The protections that have been agreed in the amending treaty defend the British national interest. In the Bill introduced today, we are legislating for new protections and new procedures to lock in our protection of these interests. Europe is now moving to a new agenda, one that focuses on the changes needed to meet the challenges of the global era. I commend the Statement to the House.".My Lords, that concludes the Statement.

Lord Strathclyde: My Lords, I thank the noble Baroness the Leader of the House for repeating the Statement. What a marathon task it was. I assure the House that I will not take as long.
	Does the noble Baroness accept that last weekend's "shall we, shan't we" treaty signing was perhaps the most humiliating public event experienced by this country since we have been in the European Union? Anyone who knows anything about Parliament and government knows that the dates of summits and Liaison Committee meetings are discussed months in advance. The Liaison Committee in another place is not so discourteous or so blind to Britain's interests that it would not have agreed to a new date. The idea that a diary clash prevented the Prime Minister joining in the signing ceremony is preposterous. I do not want the noble Baroness to repeat excuses no one believes; it is more important that we understand the reasons. Why on earth did he do this? Who advises him? Did he consult the noble Baroness?
	Whatever your approach to the treaty, the shameful spectacle of foreign leaders sniggering while Her Majesty's Foreign Secretary sidled up alone to sign the document was humiliating, and the spectacle of our Prime Minister signing at a desk alone, like a naughty schoolboy kept in detention, was embarrassing. What was the point of it all? The snub alienated our partners in Europe without fooling anyone. Perhaps he hoped Mr Murdoch would not notice. After this farce, let no one on the government Front Bench ever again raise their finger and point at anyone in this House and say that they would leave Britain isolated in Europe. The image of the Prime Minister sitting alone will haunt us for years to come.
	The noble Baroness may try one riposte to these criticisms. She could say, "Ah, but you wouldn't have signed the treaty at all". If she said that, she would be quite right; we would not have signed. We would not have supported the loss of the veto in so many areas, we would not have pushed for further institutional integration and we would not have signed anything without holding to the undertaking we gave—we all gave—to holding a referendum. But had we reached an agreement as the Government did, no other party leader would have staged the Lisbon farce that we saw last weekend.
	On the substance of the summit, we are reassured that the new reflection group is said explicitly not to be able to discuss institutional matters. But is it not disappointing that it is equally not permitted to consider current EU policies? Where does that leave, for instance, the Lisbon process? The communiqué says that it is "delivering". That is a bit of old new Labour-speak for you. Where is it delivering? How many EU directives and regulations have been scrapped since the Lisbon process began, and how many have been introduced? I wonder if the noble Baroness could tell us.
	There is much in the conclusions about migration. There is talk of a common asylum policy within two years, common rules on the return of illegal immigrants, and so on. In light of the Government's failures in this area over the past 10 years, will the noble Baroness assure the House that nothing here will be allowed to delay overdue action by this Government to contain immigration and deport illegal entrants?
	There is talk of a mobility agreement with Moldova. What, if anything, was agreed about the atrocious sex-trafficking from Moldova and some other east European nations? On Kosovo, the situation is extremely perilous. What assurances were received from EU countries about assisting with security in that region—or, indeed, in Afghanistan under a UN or NATO ambit? As the noble Baroness will know, there are in Kosovo some of the greatest treasures in the form of medieval wall paintings in Orthodox monasteries. In light of past cultural depredations by all parties in the Balkan conflicts, what steps are being taken to safeguard and secure not only minorities but also their spiritual and cultural inheritance?
	On Iran, Europe agrees that the nuclear weapon should be kept beyond Iranian hands. So what progress was made in persuading other EU countries that new export credits should be banned and access to the EU financial system restricted? Is the noble Baroness certain that the EU has the legal power to take action against Iran?
	I turn to Zimbabwe and the daily deteriorating situation of horror there. Two weeks ago, the Government sent the noble Baroness, Lady Amos, to the EU-Africa Summit to represent our country. What a pity there was no Statement to this House by the noble Baroness. She could so easily have intervened in the debate of the noble Lord, Lord Alton, on conflict in Africa last Thursday. I wonder if anyone thought to encourage her—or, indeed, even discourage her—from doing so.
	Was anything agreed at the EU-Africa Summit to discomfit Mr Mugabe? If so, why was it not mentioned in the conclusions of last weekend's summit? Why was it left to my noble friend Lord Hamilton of Epsom to raise it today in Question Time? Is the noble Baroness aware that patience in the House is wearing very thin at the line that this brutal tyranny is something that only Africa can deal with? Whatever happened to an ethical foreign policy?
	Finally, I return to the question of the referendum. The conclusions of the summit talk of,
	"better reaching out to citizens and addressing their expectations and needs".
	The Prime Minister has talked, although it seems a long time ago now, of restoring trust in politics. How can we do either of these things if two parties—the Government and the Liberal Democrats—flagrantly dishonour their promises to the British people to hold a referendum on this treaty? The Prime Minister's confidence in this treaty's acceptability and his willingness to proclaim its merits by taking them to the British people were on display in the hole-in-the-corner charade in Lisbon. The Liberal Democrats have joined him, skulking in that very same corner. If this treaty is so good, then, as Mr Blair once said, let us have the national debate: "Let battle be joined".
	As 240 of the 242 propositions in the rejected constitution are in the new treaty, and as most of the red lines were in the previous document on which we were offered a referendum, just what is the difference now? Why "yes" then and "no" now? The noble Baroness has bravely taken leadership in this House on Europe, so she knows the answers to these questions. So can she tell the House unequivocally what elements that were in the constitution are not in the new treaty? Will she spell them out? What is the difference between the two? Every other European leader admits that they are substantially the same, so why cannot she do so this afternoon? Does she not see that there will be no trust in this Government unless they fulfil that central promise which they gave at the last general election? After the farce of Lisbon, there will be no authority for this Government in Europe unless our Prime Minister can show, before ever the treaty comes to be ratified, that he is a strong leader whose actions carry the full-hearted consent of the British people? Great harm was done to the image of our country last weekend. Only honesty, courage and the keeping of promises can repair it.

Lord McNally: My Lords, watching the Prime Minister, I have worked out that his favourite bedtime reading is, How to Offend Friends and Alienate People. Last weekend, he managed to annoy the Europhobes by signing the treaty and the pro-Europeans by an exercise that sent all the wrong messages and—as the noble Lord, Lord Strathclyde, indicated—made us look silly. Fortunately, tomorrow the Liberal Democrats will have a new leader: young, committed to Europe and well versed in European affairs. He—either of them, they both fill this—will be a 21st-century leader, whereas the Prime Minister is looking increasingly like a leftover from the Attlee Government who famously boycotted the Coal and Steel Community talks because the Durham miners would not have it. However, despite the Prime Minister's ineptitude, we will support the Government in their desire for Parliament to endorse this treaty via the European Union (Amendment) Bill, so long as the Bill is presented in a positive and forward-looking fashion.
	In reply to the criticism of the noble Lord, Lord Strathclyde, I say that for the Conservatives to continue to call for a referendum diminishes Parliament and ignores the fact that the earlier commitment to hold a referendum on the constitution ended when the Dutch and French said no and the constitution concept was abandoned. A referendum would distract and delay, without settling anything, for we know full well that almost anything to do with Europe thereafter would again elicit a demand for a further referendum. I know that some of my colleagues would like to smoke out the Conservatives by calling for a rerun of the 1975 in-or-out referendum, but I say to the Conservatives that politicians of all political parties should stop reaching for the referendum fig leaf every time they face a difficult decision. We are a parliamentary democracy, and it is here in Parliament that such decisions should be taken. We made a promise on a previous constitution which was abandoned after the French and Dutch said no.
	However, are we sure that the balance is right? Is the Lord President sure that, in seeking to draw red lines, we are not excluding ourselves from European co-operation in counterterrorism, drug control, the fight against organised crime, people trafficking and immigration control, where we need to work ever closer with our European neighbours? Is she really happy that a Labour Government, with no support from their trade union colleagues, seek to deny British people rights won in Europe for workers in societies that are more socially cohesive than provided by the so-called Anglo-Saxon model, with its wide disparities of wealth?
	On Iran, the Balkans and Kosovo, surely the lessons all come back to the fact that Europe working together is more effective. Can the Minister think of a major issue where Britain's voice is not made more effective by being part of Europe—be it climate change, the world trade talks, Afghanistan, Africa or the Middle East? Will the Prime Minister be taking a more positive role than hitherto in promoting greater cohesion in defence and foreign policy? Does she agree that it is time to face the more daunting agenda facing Europe? When we come to the treaty in early spring, will this House follow the other place in debating by topic, in an orderly and structural way, so that we can have a proper examination of the Bill?
	What the Prime Minister signed in Lisbon was the necessary amending treaty to make organisational sense of the expansion of the European Union to 27 members and beyond, and it is welcome to know that Croatia, Serbia and Turkey are now in that pipeline as well. The real hypocrisy is not among those who want to ratify the treaty, like all parliamentary treaties, by parliamentary means, but among those who argued for enlargement but now wish to deny Europe the means to make enlargement work.
	Perhaps I may offer one quote from the Prime Ministerial Statement, which I greatly welcomed; it is in reference to Iran but I think it has wider implications. The Prime Minister says that,
	"there was agreement on a united European approach. Here again, the power we wield working with all the EU is greater than if we acted on our own".
	If that is what he concluded from his little jaunt to Lisbon, the trip was well worth while.

Baroness Ashton of Upholland: My Lords, I am grateful to both noble Lords for engaging with a Statement that, although long, is none the less important in the number of issues addressed.
	Let me begin by saying that my right honourable friend the Prime Minister did what Prime Ministers are required to do: he fulfilled his obligations both to Parliament and to the European Union. He appeared before the Liaison Committee, an important body in parliamentary terms; went to Lisbon and signed the treaty; and then went to the European Council in Brussels. Whatever embarrassment the noble Lord, Lord Strathclyde, may feel about my right honourable friend's signing later than the other European leaders, that is nothing compared with a Prime Minister not going at all to sign a treaty, which is the position in which the noble Lord's party would have had us.
	The noble Lord, Lord McNally, is right: we are stronger by working closely with our colleagues in Europe on trying to tackle issues that every noble Lord recognises are important, be it climate change, the drugs trade or international terrorism. All these big issues cannot be dealt with in isolation; we are far stronger by working with our colleagues.
	Perhaps I may continue on the theme of the red lines and where we are in our discussions. The noble Lord, Lord McNally, is concerned that we might put ourselves in a difficult position. I do not believe that that is true. Having negotiated in the justice and home affairs arena for two and a half years, I know that it is possible to be very clear about wanting to ensure that Britain's interests are fully and properly recognised and respected, and to do so in a spirit of negotiating with colleagues to work as closely together as possible in the fields to which the noble Lord referred. I am sure that that is exactly the position we would wish to ensure that we are in for the future.
	I agree, too, that this is about the parliamentary democracy in which we live and about Parliament's ability to take the decisions. How we decide to discuss the legislation is a matter for the usual channels. I am open minded on that. If noble Lords feel that debates of a particular kind would enhance our opportunity to scrutinise the treaty I would be more than happy to consider it as a real possibility. But I shall leave that in far more capable hands than mine.
	The noble Lord, Lord Strathclyde, brought us back to the principle of the reform treaty versus the constitutional treaty. I have no doubt that we will debate this at great length, and I have already had the privilege of a six and a half hour debate on it. However, the principle is that the constitutional treaty would have abolished the European Union and re-founded it under a single constitutional order. That is fundamentally and distinctively different from what we have before us now, which is an amending treaty. I understand the politics of all this. I understand that politically it is useful to discuss and describe an issue as being about trust in a Government—that is what opposition parties do—but we have to be realistic. What we have before us is fundamentally different and should be treated properly in a parliamentary democracy by having it debated within Parliament.
	We look forward to the young, dynamic leadership of the Liberal Democrats. I thought that the noble Lord, Lord McNally, was referring to himself in that discussion—or perhaps he was referring to me. We wait with great interest to see what happens, and we look forward very much in working closely with them to ensure that we ratify this important treaty, whoever the leader of the Liberal Democrats is tomorrow. I am extremely grateful for the support that the noble Lord has given me.
	The noble Lord, Lord Strathclyde, asked a number of detailed questions. I cannot answer the one on the sex trade in Moldova because I do not have the information. I shall write to the noble Lord on that. On Kosovo, the noble Lord referred to the "cultural and religious heritage", as it says in the Statement. That covers some of the artefacts to which he referred; that is a very important part of what is focusing the minds of those involved in this.
	On Iran, we know that the reports from El Baradei's and Solana's reports have been negative, so we are looking to see if we can get a new UN Security Council resolution that will increase pressure on the Iranians, but we remain committed to a negotiated solution. So I think that we have the authority to continue as we propose.
	As for immigration and migration, a lot of discussion took place. The Council's conclusions underline the importance of taking forward what we might describe as a comprehensive approach to migration in line with what the Commission described as its new communication on common policy. We need to think about migration from a global perspective and ensure that through the European Union we can work with third countries effectively to manage migration. As noble Lords know, that led to recent directives in the field of legal migration. We shall have to decide whether we opt in to those proposals in January. Our first priority is to tackle illegal migration and work with third countries to manage that process as effectively as we can.
	The reflection group is not looking at Lisbon. The 2008-11 cycle of the Lisbon strategy will be agreed in the spring Council. Instead, the reflection group is looking longer term, to 2020 and 2030, and our priorities are firmly on the agenda.
	As for the EU-Africa Summit, there are conclusions in the document reflecting what happened in December. Earlier today, during Question Time, my noble friend Lord Malloch-Brown referred to some of the issues raised by my noble friend Lady Amos. There was strong and real criticism of Zimbabwe from Heads of State and Government, and there have been reports in particular about the comments of the Chancellor of Germany, Angela Merkel. That is very much part of the agenda.

Lord Clinton-Davis: My Lords, is not the attack of the noble Lord, Lord Strathclyde, on the Prime Minister totally predictable? Does it not underline the complete bankruptcy of the Conservative Opposition on anything to do with Europe? If the Prime Minister had attended the signing of the treaty, would he not have been accused of putting the interests of the EU before those of the UK? Equally, if he had not attended the committee, would he not have been pilloried for having ignored the requirements of Parliament? In other words, he could not do right according to the Opposition. As it is—and I hope that my noble friend will agree—the Prime Minister should be congratulated on rather than condemned for what he did.

Baroness Ashton of Upholland: My Lords, as I have made clear, my right honourable friend fulfilled his obligations in both directions. The interesting thing for the Opposition will be—if Parliament ratifies this process—what then?

Lord Hannay of Chiswick: My Lords, does the noble Baroness not agree that it is more important to discuss the substance of this treaty than who signed what when, out of which I am not sure anyone emerges with huge credit? Those who live in glass houses really ought not to start throwing stones. The noble Baroness, Lady Chalker, signed the Single European Act, and the Financial Secretary, Mr Francis Maude, signed the treaty of Maastricht—both of which were much more weighty documents than this one. We should pass on to something more interesting.
	On Kosovo, will the Minister confirm that the European Union is now committed, effectively, to what it was asked to do under the Ahtisaari plan and that that commitment is not conditional on a positive Russian vote in the Security Council, but will go ahead willy-nilly?
	On Iran, does the Minister not agree that, although it is welcome that further sanctions against Iran will be considered both in the Security Council and the EU, there is a very strong case that, if those decisions go ahead in either one of those two forums, at the same time, the United States should say that it is prepared to enter into an unconditional dialogue with Iran?
	Finally, I noticed in the conclusions of the European Council a reference to technical preparations being put in hand on the implementation of the reform treaty on the basis of a work plan to be produced by the incoming Slovenian presidency. Will the Leader of the House confirm that Britain will play a full, effective and constructive role in those preparations? I have heard that, at the moment, there is not much input from the British side.

Baroness Ashton of Upholland: My Lords, I am grateful to the noble Lord. I associate myself with his opening remarks about who signs what, when and where. Certainly, in terms of Kosovo, we believe that the Ahtisaari proposals provide the best way forward and that is the stance that we will take. We want to ensure that Kosovo's leaders remain in step with the international community and we do not want discussions to be dragged out.
	On Iran, our discussions continue: I can say nothing further than that at the moment. As far as I am aware, we have been involved with the Slovenian presidency. I will try to follow up the detail of the noble Lord's comments.

Lord Howe of Aberavon: My Lords, I should acknowledge that I signed the treaty for the accession of Spain and Portugal to the European Union in Madrid and Lisbon. I regard that—perhaps the Minister will agree—along with the other treaties mentioned by the noble Lord, Lord Hannay, and the one signed last week, as one of the less than elegant but essentially necessary components in progress towards the coherent development and success of the European Union.
	I would not seek to argue that it was a meticulously perfect document, but they never have been because they have all been the result of endless negotiation. I am glad that it has been signed. I hope that there will be no undue enthusiasm about referendums. I have always regarded those as suitable exercises for Welshmen approving or disapproving of the opening of pubs on Sunday, but not for the merits or otherwise of a treaty of this complexity and importance.
	Having said that, does the noble Baroness not understand the shameful impact of the Prime Minister's leadership on the management of these closing stages? I am reminded of the old legal joke about counsel asking for a case to be adjourned by saying to his Lordship, "I'm afraid that the alibi witnesses are at present busy in another court". Nothing can justify the Prime Minister's failure to play the role that ought to have been played. Frankly, I worry about the explanation for such an inadequate and incoherent performance—the reluctance to give any evidence of effective participation in team membership and support of an important project, and a reluctance to proclaim the merits either here or there in the way in which they ought to have been proclaimed. I worry that the Prime Minister, so it is said, experienced some difficulty in coexisting and cohabiting with his officials at the Treasury, demonstrated some difficulty in cohabiting with some of his own colleagues in Cabinet and demonstrated almost no ability whatever to work the room of the European Council meeting in the way that President Sarkozy did.
	The Prime Minister arrived late and walked straight through the crowd as though he were among strangers, instead of taking advantage of the situation and promoting our interest by his personality and presence. Is it not this that the Prime Minister needs to learn, if he is still capable of learning such novelties—the importance of his personality at assemblies of this kind in promoting British interests in the way in which they ought to be promoted?

Baroness Ashton of Upholland: My Lords, I would say to the noble and learned Lord that I do not recognise his description, certainly in terms of Cabinet colleagues, of which I am one. I hope that the Front Bench opposite will listen to what the noble and learned Lord, Lord Howe, has said about the possibility and relevance of holding referendums. I am sure that noble Lords have listened carefully to the extensive Statement. It is quite clear that my right honourable friend was fully participating in all the discussions and is proud of the commitments he gained, with his colleagues from the European Union, in terms of our operation economically, in terms of poverty, in terms of our global responsibilities and so on—and indeed in the invitation to President Sarkozy and Chancellor Merkel to come to London to carry on discussions. I believe that demonstrates a full commitment.

Lord Roper: My Lords, we will see the Bill tomorrow, but I would like to pursue one point, which seems somewhat ambiguous, in the Statement. The Prime Minister stated:
	"To ensure that no Government can agree without Parliament's approval ... any proposal to activate the mechanisms in the treaty which provide for further moves to qualified majority voting will have to be subject to a prior vote by the House".
	Does "Parliament's approval" merely mean approval by the House of Commons, or does it mean both Houses?

Baroness Ashton of Upholland: My Lords, it means both Houses.

Lord Lea of Crondall: My Lords, whereas it may be the case that this country has always gone forward crabwise in the matter of European integration, is it not important to note that even at this Council meeting, something that has not been noted is the hugely important role of the EU, and discussions within the EU, on financial stability? In the Prime Minister's Statement, not only do we show the strengths of the EU—and if I may even dare to say, of the European Central Bank, in the facilities brought forward in the past few weeks—but also that the Prime Minister is working very closely with Chancellor Merkel and President Sarkozy on these questions. One cannot always get 10 out of 10 for every meeting that one goes to, but these are very substantial matters where progress is being made.

Baroness Ashton of Upholland: My Lords, I agree completely with my noble friend about the importance of looking at issues of financial stability. The spring Council in 2008, we believe, should consider how we can respond to ensure greater market transparency. As I have indicated, my right honourable friend has invited the German Chancellor and the French President to come and discuss these issues in greater detail.

Lord Campbell of Alloway: My Lords, will the noble Baroness confirm that no constraints are imposed on the exercise of our diplomacy?

Baroness Ashton of Upholland: My Lords, I presume that the noble Lord is referring to the ambassador role of diplomats across the world for the UK Government, in which case the answer is yes. If the noble Lord meant something else, perhaps he can talk to me later.

Lord Kilclooney: My Lords, there are some aspects of the Statement that certainly require further clarification. When it is said that the Council agreed on its approach to Kosovo, was that a unanimous decision of all 27 countries, including Cyprus? Secondly, on the question of supervised independence for Kosovo, will that apply to the entire territory of Kosovo, or will it exclude the northern part of Kosovo, in which there is a Serb-Christian majority? Thirdly, the Leader of the House mentioned that the accession of Turkey was discussed in Brussels. What progress was made on that subject?

Baroness Ashton of Upholland: My Lords, I confirm that the decision on Kosovo was made unanimously by all 27 member states. It will include all the territory, including in the north. The noble Lord asked about Turkey. As he knows, ongoing dialogues take place on different aspects of policy that Turkey needs to pursue in order to be considered firmly for membership. I do not have the details to hand on exactly how that was taken forward. I would imagine it was a more general discussion, looking at general progress. If there are further details to give, I shall happily give those to the noble Lord.

Lord Howie of Troon: My Lords, I long ago spent a year on these Benches. I then spent a rather longer 18 years on the Benches over there, since when I have more happily spent 10 years on these Benches, in the course of which I have never changed in my admiration for the noble Lord, Lord Strathclyde, a fellow Ayrshire man and one of the best contributors to this House. However, I remember that, when I was sitting over there, something called the Maastricht treaty came up; it is so long ago I can barely remember it. Being younger then, I hinted that it might be a suitable subject for a referendum. The silence on the then Government Benches was deafening, and my old friend Tom Strathclyde was among those silent. As it happens, I am temperamentally inclined towards referenda—a hush has descended on the Chamber—but I acknowledge that it is foolish of me. I wonder when the Conservative Party has ever had or hinted at holding a referendum. It did not do so even on the Magna Carta.

Baroness Ashton of Upholland: My Lords, the noble Lord, Lord Strathclyde, was blushing as he recalled the misdemeanours of his youth.

Baroness Billingham: My Lords, I thank my noble friend for her presentation of the Statement, in which she mentioned the deliberations during the weekend on Burma. For many of us, the commitment to resolve the problem seems long overdue. Today, there is even more information in the national press that gives us great cause for concern. How much urgency was given to those deliberations? What further outcome does she expect and hope to see in the short term, rather than the long term?

Baroness Ashton of Upholland: My Lords, this was an important part of the discussions for the Council over the weekend. Noble Lords will recall that new sanctions were agreed in October, which are being implemented. As I indicated in repeating the Statement, we reaffirmed the deep concern over the situation in Burma and the importance of the roles played by China, India and ASEAN in supporting change. We believe that the next visit to Burma by Mr Gambari will be crucial, and we need real evidence that the regime is ready to move beyond gestures. We maintain that the UN continues to have the lead role in establishing an inclusive political process, and we fully support it in so doing, but my noble friend is right to bring us back to the realities of some of the desperately difficult situations that exist and the need to make significant progress, which I hope that we shall see shortly.

Revenue and Customs: Data Loss

Lord Davies of Oldham: My Lords, I beg leave to repeat a Statement made by my right honourable friend the Chancellor of the Exchequer in another place. The Statement is as follows:
	"Mr Speaker, with your permission I should like to make a Statement on the progress report by Kieran Poynter, chairman and senior partner of PricewaterhouseCoopers, into the loss of child benefit records at HM Revenue and Customs. Before I turn to that, I can confirm that the police investigation continues. While the searches are drawing to a close, their inquiry is not yet complete. However, the police have reiterated that they have no information or intelligence that the data have fallen into wrong hands. They will keep that under review. "The banks, too, say that they have found no evidence of any activities suggesting fraud arising from this incident. They continue to monitor closely the accounts concerned so that they can see immediately if there is any unusual or irregular activity. As I have told the House previously, the majority of accounts into which child benefit payments are made are with a small number of banks and these banks have checked them back to 18 October, the date the missing data were posted. There are no reports of any activities suggesting increased fraud attempts deriving from the incident. "I deliberately gave Mr Poynter wide-ranging terms of reference because of the seriousness of this loss, together with my concern about previous losses of data which I referred to in my statement on 20 November. Mr Poynter started his review on 23 November, just three weeks ago, and as he says his work is far from complete and his conclusions will develop as that work progresses. Inevitably, therefore, this report is short, but I said last month that I would return to the House when it became available. A copy has been placed in the Vote Office in the usual way. "Kieran Poynter sets out the work he has put in hand. He says that he has given priority to the immediate steps Revenue and Customs must take to protect data security. Revenue and Customs has already put in place a number of measures. Mr Poynter says that these are measures that he would have recommended, and which his report sets out. As Mr Hartnett, the acting head of Revenue and Customs, said to the Treasury Select Committee on 5 December, they include the imposition of a complete ban on the transfer of bulk data without adequate security protection such as encryption, as well as measures to prevent the downloading of data without adequate security safeguards. In addition, Revenue and Customs disabled all the personal and laptop computers it uses to prevent the downloading of data onto removable media. Those computers will only be reactivated at the approval of a senior manager for a specific business-critical purpose. "Mr Poynter has also begun his investigation into exactly what happened in relation to the loss, but he makes the point that there are more inquiries to be made, more interviews to be carried out and greater examination of the evidence available. As he says, it would be wholly inappropriate for him to draw final conclusions until his work is completed. "Mr Poynter also draws attention to the general responsibilities and accountability in HM Revenue and Customs. These issues are also referred to in the capability review into HM Revenue and Customs carried out by an independent panel overseen by the Cabinet Secretary. The House will be aware that this review was commissioned as part of a general review, announced in July 2006, of the strengths and weaknesses of all government departments. The Revenue and Customs review is published today, along with that for the Treasury and updates for four other departments. I am also publishing Revenue and Customs' autumn performance report. "The capability review identifies a number of important strengths of Revenue and Customs, including a proven ability to bring in the money to fund public services while driving down its own costs and delivering greater efficiency. It refers to committed people with honesty and integrity, and with clear desires to transform and improve. The review also highlights a number of areas where improvements are needed, including the necessity to set up a simpler structure and clearer accountability, improving confidence and strengthening management information. The acting chairman agrees, and is announcing proposals to put in place a simpler organisational structure with clearer accountabilities which, as Mr Poynter says, will make it easier to implement recommendations on data security as his review progresses. "I said in my Statement that the Prime Minister had asked the Cabinet Secretary to ensure that every government department checked its procedures for the storage and use of data, and to make recommendations on how to improve data handling procedures across government. His interim report is also published today, alongside a Written Ministerial Statement by the Minister for the Cabinet Office. "The Prime Minister has already announced that the Information Commissioner will have the power to conduct spot checks on departments. There will now also be new sanctions under the Data Protection Act for the most serious breaches of its principles, which will take account of the need not only to provide high levels of data security but to ensure that sensible data-sharing practices can be conducted with legal certainty. We will consult early in the New Year on how that can best be done. The report also sets out a range of other measures. "Revenue and Customs and, before it, the Inland Revenue and Customs and Excise have served successive Governments well. Their staff are dedicated and hard working. However, the loss of this data was extremely serious and should not have happened; again, I apologise to everyone who has been affected. "As I told the House in November, the loss of this data together with losses in previous incidents mean that a wide-ranging review is necessary so that lessons could be learnt, procedures tightened and security improved."Mr Poynter tells me he expects to conclude his work in the first half of next year and I shall report back to the House when I have his final report. I commend the Statement to the House".
	My Lords, that concludes the Statement.

Baroness Noakes: My Lords, I thank the Minister for repeating the Statement made by the Chancellor of the Exchequer in another place. The Minister must be very grateful that there is only one more day until the Christmas Recess and that this is probably the last time that he has to appear to put on a brave face to cover the incompetence of the Chancellor and the Chancellor's departments—for this year at least.
	Four weeks ago, the Chancellor had to admit that HMRC had managed to achieve the largest-ever loss of personal data on some 25 million people in 7.5 million families. That Statement, dreadful as it was, was not the whole truth. It said that the release of data was carried out by,
	"a junior official in HMRC".—[Official Report, Commons, 20/11/07; col. 1101.]
	But we now know that the junior official was a manager among the top 4 per cent of staff in grade terms in HMRC. Furthermore, an even more senior person, the child benefit process owner, was well aware of the fact that unencrypted personal data were being supplied in industrial quantities to the NAO.
	The Chancellor also said that he had delayed informing the public and Parliament about the data loss because the banks,
	"were adamant that they wanted as much time as possible to prepare".—[Official Report, Commons, 20/11/07; col. 1102.]
	The British Bankers' Association immediately issued a press release to say that it had not been asking for a delay. While the Chancellor admitted to some other major lapses in data security this year, he did not own up to all of them. He did not say that there were 2,111 security breaches a year at HMRC. He did not spell out that the lost discs contained data that were not encrypted or that encryption was not a routine HMRC procedure.
	We looked forward to learning more today in the interim report of Mr Poynter, but were disappointed at the lack of hard facts. Is Mr Poynter working alone or is he allowed some support? Will the Minister say how much this review has cost to date and what it is estimated to cost in total?
	The big question for us is whether the failings at HMRC were systemic. The Chancellor has said that they were not, but Mr Dave Hartnett, the acting chairman of HMRC, when he gave evidence to the Treasury Select Committee in another place, said that the failings may well be systemic. Indeed it is difficult to find any explanation other than systemic failure to account for the fact that the letters sent out after the event also revealed personal information and not all were correctly addressed.
	We continue to have the gravest concerns about the culture of HMRC. It was created at the behest of the Prime Minister when he was Chancellor to generate cost savings. We warned at the time of the Commissioners for Revenue and Customs Bill about the difficulties of such a large merger and were unconvinced by the responses.
	The published e-mail exchanges between the HMRC official who released the information and the NAO are informative. The NAO had pointed out that it did not need the quantity of data that was actually sent and asked for a smaller, non-confidential data set. The HMRC man replied:
	"I must stress we must make use of the data we hold and not over burden the business by asking them to run additional scans/filters that may incur a cost to the department".
	The assessment and collection of taxes is not a business. HMRC's language does not acknowledge that tax assessment and collection is a public service; and with that may go a lack of awareness of the obligations that go with public service. In addition, I believe that it has subsequently been established that the cost referred to was about £5,000. What kind of organisation puts the security of data about 25 million people at risk for £5,000?
	The HMRC capability review is also published today and not before time. It talks, as does the Poynter review, about setting up a simpler structure with clearer accountability. It is full of management speak—performance management, strategic frameworks, customers and process improvement—but there is nothing about public service. Is the Minister sure there is no issue of culture to address? Structures are fairly easy to deal with, but changing culture is infinitely harder and change cannot start until the problem has been recognised.
	The Chancellor appointed Sir David Varney as the first chairman of HMRC. He was a businessman with a sound reputation in the commercial world. He set up the structures that are now to be changed. He had already left when the data loss disaster struck and his successor appeared to pay the price of failure. I say "appeared" to pay because Mr Paul Gray may have resigned as chairman of HMRC but he is still being paid in full somewhere in the Cabinet Office. Meanwhile Mr Varney is now the Prime Minister's adviser on transformational government. God help the rest of government from being transformed like HMRC.
	It remains a fact that the disks have not been found despite a huge police exercise to find them. Will the Minister say how much the police exercise has cost to date? The Information Commissioner has made it clear that he wants far greater powers to help him to enforce high data-protection standards. Our Data Protection Act does not even give the Information Commissioner full power to pursue issues in contravention of EU law and the structure of offences is weak. The Information Commissioner is being fobbed off with a non-statutory ability to carry out spot checks on government departments, which is simply not good enough.
	The interim report on data-handling procedures in government also released today holds out the prospect of new sanctions but in the same breath says that this has to ensure sensible data-sharing practices. When are the Government going to see that they have already gone too far? For good reason public opinion has shifted sharply against national identity cards and the related register. The Government must now put data security above all else or they will forfeit public trust. This Statement and its accompanying flimsy documents are no more than a smokescreen. We have learnt little that is new and some big questions remain unanswered. The Minister said that Mr Poynter would be reporting in the first half of next year. Would he give a little more precision about when he can return to the Dispatch Box to give us some answers?

Lord Newby: My Lords, I thank the Minister for repeating the Chancellor's Statement. I agree with the noble Baroness, Lady Noakes, that he must be extremely grateful that this is the last time this year that he has to appear before your Lordships' House to make such a Statement. I am sure all noble Lords would want to wish the Minister a happy and relaxing Christmas in view of his recent exertions and a relatively disaster-free new year, although on recent evidence I am not sure that he can necessarily look forward to that. As well as the issue we are debating today—and we have been spared this in your Lordships' House—a Statement is being made in another place at 5.30 pm about the almost laughable further misplacing of information by DVLA. There are two sequential Statements in Parliament today about the loss of data held by government. I doubt whether this has ever been the case before. We certainly have no cause to believe that this endemic failure is being resolved by Mr Poynter's review or anything else.
	If there is one lesson which jumps out from all the evidence we have seen about the incompetence of the Government in this area, it is that there is no way that they should now be proceeding with even more centralisation of valuable personal data, whether it be for a compulsory ID card scheme, the DNA database or the NHS case records system.
	The Government are basing their defence of their behaviour here on the distinction between systemic failure, which is the fault of Ministers, and procedural failure, which is the fault of officials. Needless to say, they have come down on the side of this being a procedural rather than a systemic failure. However, is it not the case that in recent years pressure within Whitehall, happily supported by Ministers, has been for ever-greater information-sharing across government, whatever the confidentiality problems? A generation ago, when I worked at Customs and Excise, we were not allowed to share information with the Inland Revenue on the basis of taxpayer confidentiality. Arguably, that went too far in one direction but, equally, I think that very few people could now doubt that the pendulum has swung too far the other way.
	The noble Baroness, Lady Noakes, referred to the work that Sir David Varney is undertaking on so-called transformational government. This seems to mean removing barriers to information-sharing within the public sector, the practical consequence of which could be to magnify many times the damage done by information losses of the kind experienced by HMRC. Will the Government now ask Sir David to pause and think further about whether government and the country are ready for further transformation along the lines of the recent disasters?
	On the specifics, HMRC has now apparently agreed which data are to be encrypted and which are not and it has also agreed to a clear procedure for ensuring that that is done. In that regard, can we be assured that the Government have sought and gained the support of the big computer companies which dominate the operation of IT in HMRC and other departments? On that subject, and to return to something that I raised when we debated these issues earlier, surely it is now imperative that the gateway reviews on the external use of IT companies are published. Can the Minister confirm that the Government will no longer block in the courts publication of these reviews?
	Can the noble Lord also explain why Ministers have been blocking reasonable questions about security within government? Why, for example, have the Government refused to answer simple factual questions raised by my colleague in another place, the honourable Member for Falmouth and Camborne, about whether departments have existing protocols governing data exchange within and between government departments and agencies such as HMRC? The obfuscation leads to the obvious conclusion that they have no such protocols and are trying to conceal the fact. Can he put pressure on the Cabinet Office to release any such protocols?
	Two minor but irritating issues have arisen in recent days. Can the Minister explain why the helpline for families who are worrying about HMRC data losses is on an 0845 number? The misuse of 0845 numbers as a revenue source for government departments has been a growing scandal to which there has been no satisfactory response. It is highly unsatisfactory that an 0845 number is being used in this case.
	Finally, is the Minister aware that the many millions of letters which were sent out apologising for the loss of personal data themselves unnecessarily included a great amount of personal data, including national insurance numbers? As, according to the Courts Service, 8 per cent of all official letters go astray, are not the Government just compounding the error of their earlier disaster with another initiative which uses personal data needlessly and in a way that could lead to its misuse?
	This is another sad Statement by the Government. So far, the Poynter review has not answered the questions that we need to be answered before we and, more importantly, the public can feel satisfied that personal, confidential information is being dealt with acceptably by the Government. Together with the noble Baroness, I ask the Minister when we can expect, if not a satisfactory conclusion, at least a conclusion to the Poynter review.

Lord Davies of Oldham: My Lords, I am grateful to both noble Lords for their contributions and for their seasonal good wishes, which I reciprocate in the terms in which they presented them to me. I hope they recover from their trials and tribulations ready for next year.
	With regard to the interim review, Poynter confirms that what the Chancellor said in his Statement to the House was entirely accurate with the data then available. There have been subsequent developments, but there is no question of any challenge to the Chancellor's good faith in presenting to the House with total accuracy all the information that he had available at the time. Poynter is looking at how to improve security using encryption and other strategies. It will be recognised that HMRC took action immediately to ensure that restrictions were in place. The Poynter report emphasises that he entirely agrees with the prompt way in which the department acted and with the measures that it has taken.
	The noble Baroness said that the new acting head seemed to indicate that the errors were systemic. Noble Lords who have been before Select Committees in the other place will know that challenging questions are presented and responses are given in good faith. If we look at the context in which Mr Hartnett was responding to those questions, it is clear that he had an open position on whether the errors were systemic. He did not know at that time. He was all too well aware that that is exactly the kind of issue that the Poynter report is meant to identify and which it is in the process of identifying. Mr Hartnett was not ruling anything in or out. How could he when we still awaited a full investigation of what had gone on?
	The noble Baroness asked me to identify the costs of the process. I cannot do that at this stage. This is an interim report supported by a sophisticated level of efficiency, as the noble Baroness would wish. The costs involved will become clear when the final report is due, but no one would expect that at this interim stage we can identify the costs involved in this exercise. An element of cost that we can discuss is whether the culture of the department has changed significantly. It is somewhat striking that the party opposite suggests that it has never dreamed of anything that bears down on costs, improves efficiency or introduces new managerial techniques into the Civil Service and that as far as it is concerned this is a wilful Government who pursue aims that they do not follow. That party is for ever berating this Government on the costs of government and emphasising the excessive degree of red tape, which it regards as excessive bureaucracy, yet when we make a strategic change to a major department—a change that is now being reviewed by the Cabinet review which can see no evidence that there was a loss of efficiency through the merging of the departments—it suggest that somehow the Government are at fault. I entirely refute that proposition.
	It is important that we recognise that there was a significant failure, for which due apology has been made. Lessons have to be learnt from it and those lessons have to be acted on. Poynter identified that in the most important part of the interim report. If the noble Baroness can contain her impatience until after Christmas, in due course we will get a full report from that highly qualified individual who will give the Government the best advice from a full analysis of what went wrong. Far from it being a smokescreen, as the noble Baroness indicated, it would be absurd to suggest that in the space of three weeks Poynter could have analysed fully what went wrong in the department and have provided a full account of what needs to be done in the future. Of course the report is significant, not least because Poynter has been working against a background of an intensive police investigation. Indeed, not even the police have been able to conclude their inquiries at this stage, such is the complexity of the issue.
	I want to emphasise in response to the noble Baroness that in his previous Statement the Chancellor presented the full facts as he knew them, that the department acted immediately to repair the damage regarding its procedures in such a way that the interim report from Kieran Poynter can confirm the efficacy of its actions, and that Poynter is involved in a systematic analysis of the department so that we will learn the full extent of changes that need to be effected.
	On the question of the wider review, of course it covers all government departments. The review will come to fruition in the new year. The noble Baroness asked about Cabinet Office protocols. I cannot comment on those at this stage, but I can undertake in due course to give a full description and analysis of the published report. At that point this House will have an opportunity to comment on it.
	The noble Lord, Lord Newby, said that certain lessons had to be learnt. It is the case that we have to look at the relationship between the Government and the big computer companies, as he put it, with which we make arrangements. The noble Lord indicated that in the past he had witnessed a limited exchange of information, but we are in a new era. In order to provide effective government, it is necessary for departments to talk to each other about problems that are frequently referred to in this House as being cross-government in nature and thus in need of that level of co-operation. However, it is absolutely essential that such cross-government activity has to be secure, and that is what the major report will address its investigations into. It will look at the efficacy of government with a heightened emphasis on the security of cross-government information in the wake of this most unfortunate development at HMRC.
	The noble Lord also mentioned the problems surrounding communications with the general public through 0845 numbers. In the light of these difficulties, when the department does correspond with anyone directly affected by them, it is absolutely incumbent on officials that they guarantee that the reader and recipient of the letter is the person to whom it is addressed. Given that, of course such a letter will have a little more than just an initial and the surname of the person to whom it is addressed. It is bound to carry some additional information in order to make sure that the communication is delivered correctly. I hear what the noble Lord says, but noble Lords will recognise that this is a misadventure which has caused the Government a great deal of concern and grief. This is not anything more than the product of the need to provide interaction between departments at a much higher level than in the past. Further, the amount of information which a government now inevitably compile is much greater than in the past as a result of the expectations of our citizenry. It will therefore be appreciated that it is important to look at the Poynter report and the further investigation into the wider issues of government in order to identify clearly the constructive road ahead.

Viscount Astor: My Lords, I am grateful to the Minister for repeating the Statement. When this issue first came to light in early November I tabled a number of Questions for Written Answer. The Minister kindly replied to them last week. In doing so, he jumbled the five Questions together in one Answer. On looking at it, it was quite clear why that had happened—the reply failed to answer the two crucial questions that I had sought to ask. First, I asked how many discs had been lost. I received no reply to that in the Minister's Written Answer. Secondly, I asked whether all the discs that had been lost were encrypted. I think I received an answer saying that they were but, in the light of what one has read and heard, I wonder whether that statement is accurate. Will the Minister go back to his department and check that he has not been given misleading information?
	It is beholden on the Treasury and its Ministers to answer questions properly. I know that the Minister will agree with me and I am sorry that he has been let down by his colleagues. Will he press on his colleagues the need to give adequate answers to the questions I have asked and remind them that they are answerable to Parliament?

Lord Davies of Oldham: My Lords, of course Ministers are answerable to Parliament. I am grateful that the noble Viscount expressed the point in such a courteous way. He will appreciate that in circumstances where we had both a police investigation going on and an interim report being prepared for presentation to another place today, in answering his questions earlier in the week I was necessarily circumscribed in the information I could give until the interim report had been published.
	I entirely subscribe to his viewpoint. It is an obligation on the Government to answer questions as clearly and as accurately as possible. The Treasury has an excellent record in this regard; it is one of the promptest departments in responding to questions. I shall try to keep my side of the bargain in terms of prompt answers, but there are times when we are somewhat circumscribed by other inquiries going on. The noble Viscount was asking questions which were clearly identified within the areas of the report and he will appreciate that we needed today's announcement of the interim report before I could respond to him fully.

Lord Campbell-Savours: My Lords, we have been told before that the data were encrypted. That brings me to the heart of what the affair is all about—encryption. My question is very simple: will the encryption methods planned for use in departments in the future be tested by those who specialise in breaking encrypted data? It is one thing to lose a disc, but it is another thing completely to lose the encrypted data on that disc.

Lord Davies of Oldham: My Lords, my noble friend raises an important and difficult issue. He will have learnt that the immediate emergency measures taken by the HMRC have been to introduce a plethora of passwords for entry into any one area of information. I cannot be absolutely categoric in response at this stage. I expect the report which analyses these issues will provide indications on how security can be guaranteed. I emphasise to my noble friend that his anxiety has been recognised and acted on.

Lord Marlesford: My Lords, the Minister has understandably emphasised on several occasions the complexity of the situation. Perhaps I may try to make his life easier by asking two simple questions. The first question is for a number and the second question is for an undertaking. If his briefing does not enable him to produce the number, can he ensure that it is put in the Library before the House rises tomorrow; and can he at least take the undertaking I am asking for back to his colleagues and report to the House early in the New Year?
	The number I would like to ask the Minister for is the number of occasions during 2007 to date on which, in total, government departments or agencies have had to report to the Information Commissioner the loss or corruption of or danger to information.
	The undertaking I would like to ask him for is that the Government will, from next year, make a ministerial Statement in writing—published in the Hansard of both Houses, weekly to start with, so we can see how we get on, and if the figures justify it we could then go to monthly—about every time that something is reported to the Information Commissioner, giving which department or agency has reported it, what is the information lost or corrupted and the circumstances in which that happened.

Lord Davies of Oldham: My Lords, I am grateful to the noble Lord for the qualification that he edges into on that information—namely, that communicated to the Information Commissioner—which at least identifies that he is concerned about areas of real security that are of concern to Government. We all recognise that in vast, complex organisations bits and pieces between two individuals can go astray. That ought not to occasion a great deal of alarm—but he said "to the Information Commissioner".
	I cannot undertake to deliver that information to him before the House rises tomorrow but, clearly, he wants that information as soon as possible. I will attend to that and seek to see the extent to which we can cover all that information given to the Information Commissioner.

Lord Brooke of Sutton Mandeville: My Lords, I first declare a small interest. Once upon a time, I was the Minister responsible for Customs and Excise, answerable for it to the House of Commons. It was a privilege to hold that office.
	In the context of a series of unfortunate lapses after the translation of two revenue departments into one, does the Minister recognise that the two prior departments, while admirable in their individual discharge of different functions, had very different historical and internal cultures? A merger phenomenon such as that is regarded in the private sector as requiring particularly sensitive management.

Lord Davies of Oldham: My Lords, that is true, but Government are there to provide sensitive management and to be challenged if there is a management failure. Clearly, with the loss of those discs, there has been a failure, as acknowledged by Government.
	On the more general issues, the overarching report to which I made reference—conducted under the auspices of the Cabinet Secretary—commented in April of this year on the extent to which the two departments had produced a successful merger and how, in crucial areas, they were working with greater efficiency and to a high level of purpose. No one is going to say that departments settle down in a matter of months after a merger—the noble Lord would be the first to recognise that. There was nothing in the April analysis of the department, which was looked at carefully because of the merger, that indicated that the challenging aspect of the bringing together of two departments with different cultures was proceeding other than satisfactorily.

Climate Change Bill [HL]

House again in Committee on Clause 4.

Lord Taylor of Holbeach: moved Amendment No. 23:
	Clause 4, page 3, line 6, after "budget")," insert—
	"( ) to set within each of the five years within a budgetary period an annual amount for the net UK carbon account (the "annual target"),( ) to set in every calendar year until 2044 an annual amount for the net UK carbon account for the year six years ahead (the "rolling annual target"),"

Lord Taylor of Holbeach: When we decoupled these amendments we did so in order to differentiate our proposals from those that we were debating before we broke off. It was not my intention to give the Minister a couple of hours to think about these two sets of amendments. Having said that, I am grateful for his response to the previous debate, particularly for his acceptance of the notion that the annual reporting mechanism might include measurements, as suggested by the noble Lord, Lord May. One might perhaps go on to say indices. From there it is a relatively short step to talk about indicators; in other words, milestones—annual milestones, as we were suggesting.
	I hope I will not repeat too much of the previous debate because I want to give the Minister an opportunity to build on the answer he gave regarding that set of amendments. I do not want to repeat old arguments but a rolling target mechanism is a different creature with a different—and, I hope, more effective—weapon for the Minister to use in whatever position he might find himself in five years' time. The amendments would set up yearly targets that were adjusted for the following six years and create a duty to meet those targets.
	The mechanism in place for setting a rolling annual target in Amendment No. 30 is that the Secretary of State would set the target in accordance with the recommendation of the Committee on Climate Change and after it had been approved by resolution of both Houses of Parliament. Those two conditions would have to be met before the annual target was set. The other amendments stipulate that in the reports, annual and interim, rolling targets would be included.
	We believe that rolling annual targets are the more appropriate way to have milestones. They offer flexibility and accountability. As mentioned above, the fact that targets were adjusted yearly would allow the Secretary of State and the climate change committee to take account of the multiplicity of variables that might affect the successful accomplishment of a target. That is not intended to give any Minister—or anyone else, for that matter—a way to shirk their responsibilities. On the contrary, the idea of having projections updated every year simply allows for targets to correspond more closely with scientific realities that affect the process of reducing climate change. Reduction in emissions does not follow a steady yearly pattern; all the speakers in all our debates have recognised that, and it is important that any annual milestone arrangement reflects it.
	The risk is that if some great improvement is made at the beginning of five years—say, a group of old power stations is finally phased out—the Minister will be able to do very little for the remaining five years if he wishes and will still meet the target. That is not acceptable. In order for progress to be maintained, yearly evaluations, with an eye on how one year will affect the coming years, are essential. That would affect Ministers—and everyone else. I have altered my notes, because I am sensitive to the point made by the Minister that the Government are responsible for only 50 per cent of emissions. The response to the Bill, when it is enacted, will go way beyond Whitehall. Everyone will have a responsibility to see that the targets are met.
	So, with yearly evaluations, Ministers and everyone else could be made more accountable. Actions to reduce climate change could then be assessed independently of some of the accidents of fate that might bring failure or success to a particular year's budget. That system would allow for an organic assessment process that saw current efforts matched with their related future possibilities. Additionally, having rolling annual adjustments would ensure that projections on expected progress were carried over between Governments. By having the next six years assessed annually, there would be a continuity of the process of reducing emissions that was outside the sphere of everyday politics. No Government could blame their predecessor if the targets for the following six years were under constant scrutiny. That is a major tenet of our position on the Bill as a whole.
	I am sure your Lordships are beginning to see that with rolling annual targets we would have yet another way to ensure that we were being as faithful to scientific advancement and analysis as possible while removing the ability of Ministers to avoid what we recognise is a great responsibility. At their core, indicative milestones would increase the pressure to ensure that measures were working early in the budget period and would detract from the ability of Ministers, or anyone else, to pass the buck. I beg to move.

Lord Woolmer of Leeds: Taking Amendments Nos. 23 and 24 of the noble Lord, Lord Taylor, together gives the impression that what he described previously as annual milestones are actually firmer than milestones, as the targets would become a duty for the Secretary of State not to exceed. Given the importance of the duty as spelt out in the first clauses of the Bill—the essential targets for 2050 and so on—the noble Lord's amendments go far beyond what he disarmingly described in the previous amendments as important milestones but not hardened milestones. Those milestones would become a duty on the Secretary of State. While I sympathise with the general thrust of the noble Lord's amendments, inserting that kind of pressure would go beyond that. If we return to this matter in due course, I hope a different way of framing the amendments could be found. The noble Lord might want to reflect on that.

Lord Redesdale: We have covered this ground before. The rolling targets feed into the very nature of the targets. We support that. That targets on a yearly basis should be looked at is common ground. The noble Lord, Lord Woolmer, has pointed out that a duty is being placed on the Secretary of State but, as we know, under the Bill there is no sanction against the Secretary of State if a target is not met, a point that was raised at Second Reading and probably ought to be looked at again. That is the major problem we have with all these provisions.
	The Minister said in response to the previous group of amendments that there might be certain issues that change, such as winter. I understand that certain aspects of trying to meet this year-on-year target will be difficult, especially in the area of energy generation. I was speaking to one of the energy companies this morning. Scottish and Southern Energy was talking about the type of power stations it will be looking at in the future. One of the problems all power stations have at the moment is that, although we are introducing a duty within the Bill, they have very little firm analysis of what type of power station regulation will allow them to build and what sort of return on investment will be achievable with differing government objectives. With carbon becoming one of the most important attributes, along with price and reliability, that we will have to consider when we discuss Ofgem's responsibilities in the Energy Bill, there will be a problem with the targets since they cannot be met quite so easily on a year-by-year basis.
	When we discussed this issue in the break—the Statements served a purpose—it was suggested that we could take out the milestones and consider an internal delivery path, a mechanism that already exists, to judge the trajectory. The Minister has made the point that this is a difficult area, but that is something we should discuss in looking at this area. Those targets would be set between year one and year five, and there might be—for such reasons as a nuclear power station coming on-line or the London Array becoming operational in 2012—a significant effect on the yearly basis. It comes back to the major problem we face with all of these: although some noble Lords have not agreed with our assessment of the five-year plan, there is enormous potential for drift for reasons that are outside the powers of the Secretary of State for Defra. This is one of the problems with bringing other departments in.
	The Minister has given us an answer to the previous group of amendments. With the best will in the world, the amendments of the noble Lord, Lord Taylor, are not much different, so I do not think he will not get a different response. I very much hope that the Minister will take on board this internal trajectory idea. It is one way that internal targets could be met on a yearly basis, without being set in stone in the ways that cause the Minister some problems.

Lord Campbell-Savours: I spent much of last night reading the report of the Joint Committee and have listened studiously to today's debate. The noble Lord, Lord Redesdale, used the word drift. What I am having difficulty in understanding is which disciplines will be exercised on government departments, officials and Ministers to ensure absolutely that we meet the objectives that Parliament will set when it ultimately carries this Bill. What will concentrate the mind of the Chancellor in setting the Budget, or of departmental officials in framing legislation for Ministers on the need for changes in environmental areas? The more I listen to this debate, the more I look to the words my noble friend used in replying to the previous amendment. He talked about toughening up the annual report. I hope that the reporting arrangements to Parliament set down what some might call milestones so that we can be assured that those disciplines are exercised on the people taking vital decisions.

Lord Dixon-Smith: Following on from that, I become quite concerned that we are rather over-optimistic about what this Bill will achieve. Of itself, all it does is put in place an administrative structure which will produce targets and budgets and, under regulations, can produce market mechanisms. The real changes that must take place probably have nothing to do with that. There will be immense technological changes. These will depend on regulations in an entirely different field. They will depend on financial incentives and a clear determination on the part of the Government that technology has to change. The whole energy industry has to change. We cannot use fossil fuels. That is a huge revolution in thinking, but if we do not have that, what we are writing into the Bill, and what the Government have already written into it, will be completely worthless.
	This is part of the Minister's reluctance. He has government responsibility in this field but not in the whole of that broad sweep of financial instruments and direct policy initiatives that will be required. I sympathise enormously with his position. The Minister will say that, of course, he speaks for the Government and that he will make absolutely sure. I am sure that the Government are already aware of this issue. We need to keep it at the back of our minds. Otherwise, we will fail.

Baroness Byford: I support the amendment of my noble friend Lord Taylor. I am equally concerned that targets may not be set correctly or, if somebody has a particularly good year, that the next year will be slacker. I would welcome rolling targets.
	I am grateful for the Minister's very helpful earlier response. In my comments I am trying to ensure that, when he goes back to reflect on it, he will perhaps include the other comments that have been made. In his earlier response, the Minister referred us to Clauses 28 and 29 and slightly implied that all was well because those clauses covered it. Indeed, those clauses put a duty on the committee to lay information before Parliament, but it does not mean that Parliament will debate it or have any influence over its outcome. Will the Minister look again at Clauses 28 and 29 to see whether they are strong enough?
	I endorse what my noble friend said about scientific advances. Clearly there will be many in the years ahead. We cannot leave it for five years. These targets need to be adjusted. That is why I did not speak to the first group of amendments. I do not support the Liberal Democrats' fixed approach but I support my noble friend in his rolling targets and therefore support his amendments.

Lord Taylor of Holbeach: I rise to support the comments of the noble Lord, Lord Woolmer. Indeed, you could argue that it is inconsistent to talk about indicative targets and then about a duty to fulfil them. Faced with such situations, it would be customary for a speaker moving an amendment to say that it was only a probing amendment. This goes a bit further than that as the noble Lord, Lord Campbell-Savours, said. This is about the sort of mechanisms the Government need to have at their disposal to keep the pursuit of the Climate Change Act—as it will be when it is enacted—on course to meet that target. I make no apology for introducing these concepts.
	The Minister is already halfway there, as I said in my preamble. I said that he had accepted the notion of the noble Lord, Lord May, and what he was trying to say about measurement. Then one hears about indices and the way the scientific world talks about the dynamics of measurement. It is not, then, a great leap to start talking about predictive indicators. If you do not have a duty to try to fulfil the obligation to meet those indicators, there is no coercive power under this Bill to deliver what we are seeking. The Committee is in the position of having to bring forward amendments to give the Minister and his successor the opportunity to deliver what we all know this Bill is supposed to produce.

Lord Oxburgh: I am not entirely sure what the appropriate mechanism is to do what we are all trying to do, which is to keep this matter of carbon management right at the top of the agenda, making sure that it does not slip down and that people—particularly the Government—do not forget it. It might be worth bearing in mind that a number of large energy companies, when now considering projects and talking to their individual component parts, require not only a financial budget but an emissions budget. It might be worth asking the relevant departments, to which attention has been drawn in the discussion so far, to produce carbon budgets as well as financial budgets, simply to focus their attention on this problem.

Lord Rooker: I have no complaint about the decoupling. As the noble Lord, Lord Taylor, said, the Conservatives did not support the Liberal Democrats; I suppose that the Liberal Democrats did not support the Conservatives. I am the one who is being non-party political, because I am giving the same answer to both of them. The noble Baroness, Lady Byford, asked me to do precisely what I offered to do in the previous debate when I referred to Clause 28; that is, to take the comments away. I was not using the provisions as a defence for where we are now; I was saying that we will look at them again to see whether we can modify them to meet the points and desires expressed in this debate.
	The noble Lord, Lord Taylor, referred to my saying that the UK does not have control over all the emissions. I should clarify that because I may have misled noble Lords. We have no control over the annual, year-on-year fluctuations in emissions from 50 per cent of the economy—I think that that is accepted—but the EU Emissions Trading Scheme covers half the UK's carbon dioxide emissions. The Government set the cap for them over five years. Over the budget period as a whole, we have control over the emissions. Within the emissions trading system, however, as colleagues know, companies are free to vary their annual emissions provided that they meet their obligations over the period as a whole. The Government have no control over the annual emissions from UK companies within the trading system. That was the practical reason that I was giving. I was not saying that we have no control whatever—there is control over the five years—but we have no control at all over how the obligations are practically operated by companies.

Lord Redesdale: As I understand it, companies could deal with their emissions by buying in from other people. There is no obligation on them to reduce their carbon emissions. Therefore we would have a paper exercise in the British economy's production of carbon by which, even if companies had met their obligations and produced less through buying in, they would be producing more carbon, though offsetting it by buying other people's trading.

Lord Rooker: That is precisely the case and the amendments would not take account of it.
	I return to the amendments. The issue has been put in a slightly different way, and it is important for the next stage to know that the Government have a view on particular amendments. Last week, the noble Lord, Lord Taylor, said:
	"These emissions vary from year to year, and five years is a sufficiently long period in which to get the feel of things without it being too short a period to be blown off track by seasonal variations that may occur".—[Official Report, 11/12/07; col. 217.]
	Those seem to us to be good arguments against annual targets. However, we would want to know—not necessarily today—how Amendments Nos. 23, 24, 30, 59, 69 and 72 would work and why they contain both legally binding annual targets and non-binding rolling annual targets. As I have said to noble Lords privately, this is a classic example of why this Chamber needs an overhead projector, so that we can see on a screen what we are talking about. It would make it easier to explain. Would the targets be the same, or will a Government be able to set two targets for the same year so that they could always claim that they were meeting one of them? If they could have two targets, you can be sure that that is what they would do. If rolling targets will be set each year, six years ahead, how will that work within the five-year budget framework? What will be the point of the rolling targets if they do not add any value? They may just be ignored. Furthermore, how would rolling annual targets fit in with the proposal in Amendment No. 36 for further interim targets in 2015, 2030 and 2040? Three targets may be applied in 2030, for example—the annual target, the rolling annual target and the interim target, which may each require different levels of emissions. These are practical points. Although we do not agree with the proposal in the precise way in which it has been put, we certainly want to take it away for consideration.
	We do not believe that setting an arbitrary figure before the start of each year is the best way to ensure that the Government are accountable to Parliament and the public. The accountability provided by the Bill is attractive because it addresses the various difficulties that we have identified in annual targets. We may not have got it right; we would certainly want the climate change committee to look at it. As I have said, we recognise the demands for stronger annual accountability as expressed in these debates, and we will certainly take the issue away for consideration. Although I cannot guarantee to return to it in Committee, we shall put something to the House on Report.

Lord Taylor of Holbeach: I welcome the opportunity to discuss in further detail how we might come to a form of words which would amend the Bill in the way in which the Committee has expressed. In view of the Minister's commitment to that style of action, I am happy to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendment No. 24 not moved.]

Baroness Miller of Chilthorne Domer: moved Amendment No. 25:
	Clause 4, page 3, line 8, at end insert ", and
	(c) to ensure that the number of carbon units credited to the net UK carbon account for each year of a budgetary period does not exceed 30% of the difference between the 1990 baseline and the annual equivalent of the carbon budget."

Baroness Miller of Chilthorne Domer: I absolutely agree with the Minister about needing an overhead projector when discussing some of these issues. That is partly the purpose of my tabling Amendments Nos. 25 and 27, because I want to draw out from the Minister comparative answers to two questions on the differences we are discussing. We talk about a reduction in the carbon budget of, let us say, 30 per cent. We then think that we are at 70 per cent, but a large number of different issues are at play which I shall attempt to explain through my amendments. It would, as the Minister acknowledged, be much easier to explain the issues if one could visualise them as pie charts and so on, but I shall attempt to do so verbally.
	These two amendments would tackle the question of how many offset credits can come from outside the UK. Amendment No. 25 would limit the proportion to 30 per cent of the difference between the annual budget and the original baseline. The limit would be 30 per cent of the reduction effort required to meet the target. In other words, for the Government to comply, 70 per cent of the target reductions must be achieved by reducing domestic emissions or by increasing domestic carbon sinks. To meet the 2050 target, emissions must be 42 per cent lower than they were in 1990. In other words, 70 per cent of the 60 per cent target—if that is what we settle for in the Bill, though I hope we do not and go instead for a higher target—must be achieved domestically. The other 18 per cent—that is, about 30 per cent of the 60 per cent—can be covered using carbon credits. Most of those carbon credits will probably be offset credits purchased either through the clean development mechanism or as EU allowances.
	One of the reasons for moving this amendment is to draw out from the Minister an estimate of the costs. There are agreements both ways, but this could be an expensive business. The partial impact assessment suggests that it would be 25 per cent cheaper to offset one-third of the emissions from overseas than it would be to achieve the reductions domestically. Is that likely to be the case? This is an issue that we touched on the other day in Committee.
	In 1990 the UK emitted 775.2 million tonnes of greenhouse gases in carbon dioxide equivalent, and in 2006 the UK emitted approximately 658.1 metric tonnes of carbon dioxide. If my maths is correct—though it may not be—domestic greenhouse gas emissions need not be reduced at all under the Bill in order to meet the Government's targets. The Government could simply purchase carbon credits to cover the difference. In other words, if emissions were still at present levels in 2050, the Government could claim to have met their targets entirely by purchasing offsets. The price of a certified emissions reduction—the carbon unit created by the clean development mechanism of the Kyoto Protocol—is currently about $10 per tonne of CO2 emitted. In order to cover the entire target reduction in 2050, the Government would therefore have to spend some $4.6 billion. That would cover only a single year, whereas the Government would have to offset the difference between actual emissions and their carbon budget every year. To date, carbon emissions have been rising.
	The second amendment is different, though I am sure that the Minister, with all the resources of his department, will be able to explain the difference better than I can. However, I will attempt to prove that I have tried to find the difference. Amendment No. 27 would place a limit on the number of international credits used, based on the size of the budget rather than the size of the target. In the short term that would lead in practice to more international credits being allowed. In the long term, however, it would lead to fewer. For example, in a 2020 budget with a 20 per cent reduction target—where the baseline equals 100—a 30 per cent target would lead to a limit on credits of six; that is, 30 per cent of 20 per cent of 100 equals six. And for Hansard's benefit I should say that this is clearly written out in my notes. In a 2050 budget with a 60 per cent reduction target—where the baseline equals 100—30 per cent of the target would lead to a limit on credits of 18; that is, 30 per cent of 60 per cent of 100 is 18. In the short term, a limit on credits based on the budget would mean that the Government could cover a much greater proportion of targets using international credits. That is far more numbers than I need to use; maths has never been my strong point. The point of the exercise when examining these amendments is to see exactly what would be the effect of putting a cap on the international credits.
	As the Minister said, this is a difficult issue to debate non-visually. It is also difficult to debate it without using exact figures, because it is difficult to prove the end point being reached. However, having worked through this several times, I believe that if we do not put a cap on these international credits we will not be able to arrive at a satisfactory position where we can measure our domestic achievement, maintain environmental credibility and demonstrate that the developed states are taking a lead. I am glad that Bali has set us on the road. However, by the time we get to 2020 we will have to have established clearly through our efforts that we have had the basic principle of supplementarity very much in mind. I do not envy the Minister's having to reply to these amendments and hope he can draw out the difference between the two. I would be grateful to have that put on the record. I beg to move.

Lord Crickhowell: In light of the extraordinary complexity of the noble Baroness's introduction to the amendments, noble Lords may be amazed that I rise to my feet at all and attempt to make one or two clarifying remarks. It is a great pity that the noble Baroness has raised the issue at this stage. It would have been easier and clearer if we had come to debate it when we got to Clauses 21 and 22, which define net credits and explain how the system is designed to work. Perhaps we will return to it on Amendment No. 111, which also addresses the issue by placing limitations over particular periods. Frankly, we will not get very far if we follow the line taken by the noble Baroness and seek to impose a great all-embracing limit on the UK target at this stage.
	At Second Reading I addressed some of the issues and referred to important evidence given to the committee by my son, who dealt with these matters before it. He works for Climate Change Capital and has spent most of the past weeks in Bali at the conference. I am not sure whether that was for good or ill. He probably knows as much as anyone about the complexities of climate emissions trading and these issues. In his evidence he expressed that it was extremely difficult to form judgments about the exact percentages and figures that we should settle on at this stage. He suggested that when we moved on to the real as opposed to the draft Bill, we should make sure that the climate change committee was not just given the task of recommending the UK's share of credits and ensuring that the UK made a full and adequate contribution to the reduction of climate change, but that it should be able to embrace the issue of the international contribution. My son spoke rather effectively and at some length about the importance of making sure that we got the contribution not just from industrial nations but from the rest of the world as well.
	It does not matter in improving the environment where in the world we make the reductions. There are powerful arguments for ensuring that substantial contributions are made outside this country, arguments which I need not develop further now as I spoke on them at Second Reading. The conclusion that he and I came to, and indeed that the Joint Committee came to in its detailed consideration, was that these were exactly the kinds of issues that the climate change committee should look at year by year in evaluating the contribution being made by the UK. The committee should ensure that any imported credits were worth while and stood up to international and national evaluation of their value—that they were not just paper transactions or the kind of scams referred to by some critics but made really worthwhile contributions. The committee should also take account of the need to get a value for carbons in this country and in Europe that ensured that full potential was made of industrial development, and so on. This, surely, is exactly why we have a climate change committee.
	My son is rather an expert on these matters and spends most of his life dealing with nothing else. If he feels that he is totally unable to arrive at the right percentage to put into any part of the Bill at this stage, I am quite certain that I have no right to form a judgment about percentages, and I am pretty confident—and I say this having heard the speech of the noble Baroness—that nor is she. All this talk about 70 per cent of this and 30 per cent of that and 18 per cent of this and that is meaningless, frankly, when debated in those terms in this House.
	I strongly urge the Committee to follow the recommendations of the Joint Committee on the draft Bill, which spent a lot of time considering these issues. It reported on them in pages 30 through to 35, covering the whole issue of supplementarity and strongly urging that the Bill be amended,
	"to give the Committee on Climate Change a duty to report annually on the use of carbon credits in the preceding year. In doing so, the Committee should be required to give an opinion on the robustness of the schemes under which these credits have been issued, the effectiveness of these credits in reducing global greenhouse emissions, and the transparency with which the Government has reported their use".
	We made other similar recommendations on the slightly wider issue of the Kyoto Protocol to which the noble Baroness referred.
	I suspect that we shall return to this matter and I do not want to delay the Committee too long. I hope that we shall come back to it when we come to Clauses 21 and 22, which is the appropriate place to do so. We should look at the issue there and in the terms of the job that we are giving to the climate change committee, because it really is a ludicrous proposition that we in this House can come to sensible decisions about particular percentages applied in this extremely complex and changing situation.

Lord Puttnam: I endorse very much the principle lying behind the noble Baroness's amendments, particularly Amendment No. 27, and in only one respect do I depart from the views of my noble colleague on the committee, the noble Lord, Lord Crickhowell.
	I came to the conclusion following our report, and having read more and having talked to a great number of people, that the heart of a successful Bill lies in the concept set out by the noble Baroness—and, indeed, the one that we shall discuss in the group led by Amendment No. 29. I discovered that very little is known by the Government about the present situation. As a result I have put down a Written Question asking the Government what the present indicative figures are for the purchase of carbon emissions. In a sense this amendment is the litmus test, for all the reasons set out by the noble Lord, Lord Dixon-Smith, just now. This is a very significant Bill, which will fail unless it is able to provoke very significant behaviour changes in this country. This is the area in which I depart from the noble Lord, Lord Crickhowell.
	I think that it matters very greatly where each individual carbon emission is saved from. If we fail to alter our behaviours and somehow, by dint of our wealth or sheer cleverness, are able to push the problem overseas and make it one that developing countries effectively solve for us, we shall have failed, and this Bill frankly will have no real reason to be on the statute book. At that point, we may as well call it the "Carbon Emissions Trading Bill", because that is what it will have become. I do not think that that is something that anyone in this House particularly wishes to see happen.

Lord Crickhowell: If I gave the impression that I did not think it mattered, that was not what I intended to say. Of course, I agree that we have got to make a very substantial contribution as part of this, but, with regard to CO2 emissions, it does not matter where they come from anywhere in the world. There are a lot of extremely good reasons why we should make a very substantial contribution. What I am saying is that I do not think that I am in a position, or this Committee is in a position, to say whether the cap should be 10 per cent, 20 per cent or 30 per cent. That is the issue that the climate change committee can recommend on in the light of the circumstances of the time, the price of carbon and all the other relevant issues.

Lord Puttnam: I thank the noble Lord. I did not for one moment think that he did think that, but I felt it necessary to raise the point.
	I urge the noble Baroness, when she reconsiders this matter before Report, to push the figure up from 30 per cent to 40 per cent. I believe that there has to be such a figure. I am grateful to the Front Bench for supplying us with briefing paper 5, page 2 of which reads:
	"The Kyoto Protocol allows countries to use international emissions trading mechanisms to help meet their targets, provided that this is 'supplemental' to domestic action to reduce emissions (which must constitute a 'significant element' of the action taken by developed countries)".
	I wish that I could trust words such as "supplemental" and "significant", but life has taught me that I cannot. That is the reason—certainly from my perspective—for insisting on a figure being in the Bill. I would rather that it was 30 per cent but I shall settle for 40 if that is what it needs to get this amendment through this House. I shall support that situation at Report.

Lord Turner of Ecchinswell: My comments are in sympathy with those put forward by the noble Lord, Lord Crickhowell. This is a very important issue of how far the UK relies on its own reductions in carbon emissions and how much on bought-in credits from overseas. Clearly, there is a balance to be struck. There is a strong case in theory for achieving carbon emissions at lowest cost, wherever that is possible across the world. There is also a good argument for carbon trading being a mechanism by which economic resources are transferred to developing countries that are themselves achieving carbon emissions cuts.
	On the other hand, it is clear that the primary focus of developed countries—and this is why the word "supplemental" was used in the Kyoto Protocol—must be on reducing their own carbon and other greenhouse gas emissions. That is vital for two reasons. First, it is only because we are driving down and are committed to driving down our own emissions that we will be the drivers of the new technologies that are then available to the rest of the world, be they new technologies in energy efficiency or renewable energy. The other is perhaps a more short-term thing, but at the moment we cannot be as sure as we should like to be about the robustness of some of the offsets that we can purchase from the other end of the world. Therefore, it is essential that the primary focus of the UK climate programme be on our own greenhouse gas emission cuts with only a supplemental role for bought-in credits.
	In that context, I believe that the noble Lord, Lord Crickhowell, is correct to say that the details of that require more thought and that that is something that the climate change committee should look at and develop recommendations on. The appropriate amount of a purchase from overseas will change over time; it may be appropriate for it to be somewhat bigger in the very short term—in the first budget or so—because it is difficult to turn the ship quickly, but it should reduce over time. In that respect, I admired the ability of the noble Baroness, Lady Miller, to construct between Amendments Nos. 25 and 27 something which many of us when we first looked at the paper thought must be contradictory but which is a clever mathematical way in which to achieve that tightening over time. However, I worry that, if we accept the amendments, we would inadvertently make them far too lax.
	For example, if we run the figures on Amendment No. 27, if the budget for 2020—the third of the first three carbon budgets—was at the lower end of the range suggested by the Bill at 26 per cent, so that the budget would be 74 per cent of the 1990 figure of 100 minus 26, the amount that we could buy in to achieve that would be 30 per cent of 74 per cent, which would be 22 per cent. In that case, we would have achieved 90 per cent of our reduction by a bought-in mechanism and, over 30 years, would hardly have cut our greenhouse gases at all. Therefore, the principle of the amendment is worth talking about, but the details have to be worked out by the committee. If one puts in place a set of figures without that detailed thought, there are two dangers. On the one hand, it is impossibly tight, but it also signals a willingness to buy in credits from overseas. That is what would be achieved by the 30 per cent figure proposed in Amendment No. 27.

Baroness Northover: I endorse the principle of the amendments and what was said by the noble Lords, Lord Puttnam and Lord Turner. It sounds as though the son of the noble Lord, Lord Crickhowell, is in favour of the principle even if he cannot decide on the relevant level. We clearly cannot simply deal with this problem by shuffling it off on to other countries. That is the important principle of the amendments. All countries will need to reduce their carbon emissions, but especially developed Western ones. That is the focus of the amendments. Clearly, credits will be useful to developing countries, but we need to balance that if those countries are to be able to develop themselves. It is extremely important to bear that in mind. Therefore, we must give a strong direction to the climate change committee that these reductions must be largely in the UK and not simply by trading. That is why I support the principle of the amendments.

Lord Whitty: The noble Lord, Lord Turner, pre-empted aspects of what I was about to say. The noble Lord, Lord Crickhowell, is undoubtedly right that this is complex. He may well be right that, in the end, wherever the carbon cut occurs in the world is equal. However, there are a number of important political and technical issues that require us to take the principle of the amendment very seriously. If the outcome were, never mind the precise arithmetic of the 30 per cent, something like what the noble Lord, Lord Turner, said—that 90 per cent of our achievements as a result of following the precepts of the Bill were actually achieved overseas—that is not the Bill that we are selling to our own people and the rest of the world. If we were buying all the credits overseas, British citizens would be without the pressure on their way of live to adopt new technologies and new ways of doing things which keep us ahead of the game.
	It is complex, because three different elements are intertwined. They are interrelated but not the same: there is the issue of trading; of our domestic target, which is essentially what is in the Bill; and our Kyoto commitments and the supplemental mechanisms that are provided under Kyoto. They do not all end up with the same result. The latter two, in this context, can be seen as mechanisms for achieving the first, but they are not the same and they are not the same answer. One could adopt a figure along the lines of the amendment without at the same time inhibiting trading or any new post-Kyoto international agreement.
	The central theme of the Bill is that Britain is setting itself—its own industry and people—a target to make a significant contribution towards the problem of climate change. If we allow a situation under the Bill whereby our companies and institutions are buying those credits elsewhere, that central principle falls.
	The noble Lord, Lord Crickhowell, may well be right: the exact figure and the way in which that is achieved may be best left to the advice of the climate change committee. The optimum figure will certainly change over time. Apart from anything else, if the whole economy is in the trading mechanism you cannot count these things twice; therefore you are at the end of the road. But at this stage of the Bill, whereas we may not actually agree on a percentage, the principle put to the climate change committee should be clear. There should be a limit on the degree to which we can meet said targets over the budget set out in the Bill by overseas credits, however we care to express that. Although we can all argue about the 30 per cent—we know that it will change over time and we accept that the climate change committee will make the recommendations—the principle raised by the noble Baroness, Lady Miller, should be included in the Bill.

Baroness Young of Old Scone: The noble Lord, Lord Turner, admirably expressed what I was going to say, but I want to add one more thing. It is important to get the right balance between international credits and UK action for all the reasons that Members of the Committee have described, such as the decarbonisation—that is a dreadful word—of the UK economy. Furthermore, we will not exactly look like global statesman and leaders on the carbon front if we are not doing very much back home, and, at the moment, confidence in the green development mechanism is not where it should be in terms of the sorts of gases that it is reducing and the verification mechanism. In the early stages, there is an absolute need for a strong focus on carbon reduction within the UK as well as doing our bit for carbon reduction internationally.
	I am not sure whether the target is the right one—there are two different targets for two different amendments in this group. The noble Baroness Lady Miller of Chilthorne Domer, admirably wrestled with the complications of the targets. The answer probably lies with the climate change commission—sorry, climate change committee: that was a Freudian slip that pre-empts a future amendment—but that worries me. The noble Lord, Lord Crickhowell, talked about year-to-year changes by the climate change committee. That is not the answer either. We have to find a way of giving a strong signal to British business and investors in British business that the Government are earnest about UK carbon reduction. However we do that, it needs to happen. Some strengthening of the role of the climate change committee in the Bill to make it clear that there is a requirement for it to report in that fashion and to make a strong recommendation to the Government along those lines would be of some assistance.

Lord Teverson: I was interested to hear interviews with the Secretary of State in Bali at the weekend because he endorsed an earlier amendment of my noble friend Lady Miller when she said that by the time we get to 2050, the 60 per cent reduction should be completely UK. The Secretary of State said that we are bold in the United Kingdom—I paraphrase that but it is what he said. We are putting through legislation that will ensure that Britain reduces its carbon emissions by 60 per cent on a statutory basis. That is what he said, but that is not what the Bill does. I wish it did but it does not. Because of international trading and the concept of a carbon account, we can get to 2050 and under certain circumstances not have reduced our carbon emissions at all. In fact, under certain circumstances, we could reach the 2050 target but miss it because we had been selling credits because our industry had decarbonised so much.

Lord Campbell-Savours: Does the noble Lord not accept that Parliament would not allow that? With annual reporting to Parliament and the debate in Parliament what he is saying is inconceivable.

Lord Teverson: Can the noble Lord please repeat that?

Lord Campbell-Savours: What the noble Lord is saying is inconceivable because the annual debate in Parliament, discussions among Members of Parliament, decisions in Parliament on these matters and the work of the committee would prevent that happening. He is talking totally hypothetically.

Lord Teverson: I did indeed say that it would be in extremis, but the Bill does allow that. It is very unlikely that that would happen. I am not arguing that it would actually happen, but it could, within a very large spectrum, mean that any of those results, between what we emit now and what our target is in the future, could be possible, given the flexibility of the concept of the carbon account in this Bill. It is quite clear that those outcomes could be very broad. The principle of my own amendment, Amendment No. 111, that I also wish to talk to, is that we need to understand this difference. I am not completely against including a certain degree of trading within our targets for reduction—that is a practical and reasonable way forward. Again, I emphasise the point that if we say that we do not allow all credits and trades to count, that does not in any way stop those trades happening anyway, because they do happen. The EU ETS will carry on regardless, as will the flexible mechanisms under Kyoto and no doubt its successors.
	What we are saying—this is absolutely core to what the Government themselves believe—is that there has to be, primarily, a reduction in carbon in our own economy, outside of any trading. To do that, we need to have that stated in the Bill itself. It is as simple as that. In my own amendment, and that of my noble friend Lord Redesdale, we have put two numbers. We have said 10 per cent up to 2020 and then 5 per cent. I am far less adept at mathematics than my noble friend Lady Miller. I had meant that to mean 10 per cent and 5 per cent of the total carbon budget, rather than the difference. These numbers are clearly things that we would have to be more clear and precise about, as we move through the Bill.
	It is essential for the purpose of the Bill, for the reputation of the Bill internationally and for our leadership internationally that there should be a restriction—preferably one that gets tighter as time goes on—on how much we can include carbon trades within our carbon budget. That is the way that we will lead. That is the way to make it clear to the international community that there is no fudge factor—this is much bigger than wiggle room—and to say that really we are leading here. We need that to be in the Bill.
	In terms of the view of the noble Lord, Lord Crickhowell, on targets, I am very reticent—I am not saying it is impossible—about delegating that entirely to a climate change committee. At the end of the day, it is up to politicians to decide on the right figure. It is not going to be just a technical calculation. It is not just a purely scientific calculation to work out what this percentage should be. I think it is one that is, to a degree, going to be subjective, and one that we should be able to make our own decision over, perhaps following advice. I would be disappointed if we did not have a number for the total proportion of credits actually in the Bill.

Lord Crickhowell: I am entirely of the view that we need to have a very strict internal limit. The question is how best to define it in the Bill. I also agree that we need to give the climate change committee a very clear direction and steer. That may take the form of saying that the figure of 60 per cent, if that is what it finally is, is an internal figure, rather than this complicated series of formulae that were introduced by the noble Baroness, which I think people would find very hard to comprehend or explain. I would prefer, if we are going to say that there has got to be a limit and a steer, to turn around and say that the internal figure has got to be a fixed percentage and that the climate change committee should take us in that direction. The noble Baroness, Lady Young of Old Scone, was right when she said that we have to give that steer and direction. What we are groping for is how we get there in a way that is clear. It is not a very good idea to have a Bill that sets out a formula that produces total incomprehension in the ordinary individual.

Lord Teverson: I thank the noble Lord for that intervention and I agree with much of what he says. I am not fully resolved on the mechanism myself. All that exists at the minute is part of the remit of the climate change committee, which says that this will be something on which it advises. I would certainly require there to be a restriction even if we decided later what it was. I believe we should make up our mind on that restriction before the Bill gets Royal Assent. This is a core area. It does not get in the way of carbon trading happening within the schemes that exist at the moment or those that will exist in the future. In terms of the UK's leadership, and the Government's and the Secretary of State's desire to lead, a formula like this is essential.

Lord Oxburgh: I endorse much of what my noble friends Lord Turner, Lady Young and Lord Whitty said, as well as some comments made by the noble Lord, Lord Teverson. It does not matter to the world very much whether this clause exists or not. In principle, provided those reductions that are certified are indeed legitimately made, it does not matter globally. But it certainly does matter for the UK, both from the point of view of moral leadership and for the positioning of our industry. I would add that if we are doing this in the interests of supporting British industry and positioning it better for a low-carbon world, we need to do this in a considered and gradual way, so that British industry is not dually disadvantaged by comparison with its competitors in Europe. We believe that in the long term, this would be an advantage. But a lot of industry lives on a quarter by quarter, year by year basis. It would be important not to impose burdens that would unduly disadvantage them in the short term. I am sympathetic to the view of the noble Lord, Lord Teverson, that this is not entirely a matter for the climate change committee. It is a matter of broader government policy, basically positioning the country as a whole. Whereas the climate change committee's views would be of interest and importance here, it is a government decision.

Earl Cathcart: Before we started to debate these amendments, I was going to say that the amendments from the Liberal Democrat Benches are confusing, as they seem to contradict Amendment No. 8 to Clause 1, earlier tabled by the noble Baroness, Lady Miller, which was supported by the Liberal Democrat Front Bench. That amendment seemed to rule out carbon trading altogether, by confining our 2050 target to UK domestic reductions only. Now the Liberal Democrat Benches seem to have changed their mind and accepted that there is a place for carbon credits.

Lord Teverson: The Liberal Democrat Benches have been absolutely consistent. We are not in any way saying that there should be no trading. Trading will continue anyway, whatever goes on with the targets of this Bill. The amendment of the noble Baroness, Lady Miller, which we supported, said that by 2050, we should come down to zero trading in terms of counting it towards our emissions. But trading will continue anyway. The EU ETS just carries on trading; the flexible mechanisms of Kyoto will just carry on, whatever we use as a measurement here. We are being entirely consistent. We agree with trading entirely, but how much of it you can count towards a domestic target is a matter of political debate.

Earl Cathcart: I thank the noble Lord for that intervention. I had thought that the idea was to confine the 2050 target to UK domestic use, although he may have said that there would be carbon trading on top of that. Be that as it may.
	We believe that to put percentages in would be far too restrictive. However, if we were asked to pluck a figure from the air, what about 25 per cent? We have had 30 per cent, 10 per cent, and 40 per cent from the noble Lord, Lord Puttnam. We on these Benches do not know the right answer, and I do not think that we would get consensus in the Committee anyway. My noble friend Lord Crickhowell does not know, and he is an expert; I am not.

Lord Crickhowell: I am not an expert.

Earl Cathcart: Well, my noble friend is certainly more of an expert than I am. The committee's members are the experts, and they should decide. The Bill should have no restrictions in it, but should give the committee a steer on our thinking. Once the committee has looked at all the evidence, it should then say what percentage limits should apply.
	The concept of allowing overseas credits to be used to reduce a country's net carbon account is widely accepted internationally. There are already at least three international agreements for allowing foreign schemes and reductions to be used in reducing or netting off the UK carbon account—the UN framework, the Kyoto Protocol and the EU Emissions Trading Scheme—and no doubt others will be developed.
	There are two types of international carbon credits. The first is where UK companies and entities can buy credits from those who emit less than their capped allocation, and the second is the funding of projects abroad, which will displace the growth of emissions from the developing world. UK companies that emit more in a given period than their allocated cap must buy sufficient credits to bring their net carbon account into line with their cap. They can buy credits from another company within the UK; that will reduce their net carbon account but increase the selling company's, so that both companies stay within their respective cap allocations. Because those transactions take place in the UK, there is no change to the UK's net carbon account. Alternatively, the company can buy its credits from another company outside the UK. That will reduce both the individual company's net carbon account and that of the UK.
	That carbon trading is already taking place. It allows participants to reduce emissions where it is cost effective to do so and to trade where it is cheaper for others to do so, therefore reducing emissions at least cost. The noble Lord, Lord Rooker, said last week that the European Commission confirmed this,
	"finding that the costs could be reduced by a third through emissions trading".
	However, it is vital that the caps set internationally are robust. If not, the credits bought are likely to be from the most lax systems. If that happens, progress to reduce emissions will be slow.
	The UK company can also help to pay for green projects in a developing country, as can the Government. The effect would be to reduce the net carbon accounts of the Government and the United Kingdom. But are those credits for overseas projects desirable? In my view, they clearly are. As the noble Lord, Lord Rooker, said on Amendment No. 8,
	"it does not matter where on the planet the reductions take place, so long as they are proper reductions".—[Official Report, 11/12/07; col. 185.]
	I agree, but when I wound up on Second Reading I said:
	"It is rather like the buying of indulgences ... While it is obviously worth while to contribute to the global battle against climate change",—[Official Report, 27/11/07; col. 1207.]
	that should not be allowed at the expense of taking the necessary actions within the UK. The noble Lord, Lord Puttnam, said a little earlier that it is like pushing the problem abroad. It is actually pushing the solution abroad; we have to find the solution in this country.
	Pushing the solution abroad would convey entirely the wrong message. If the UK failed to reduce its own emissions by allowing too high a percentage of foreign credits, it would be a sort of "business as usual" approach. That theme is echoed by the Kyoto Protocol—it was referred to by the noble Lord, Lord Puttnam—which states that,
	"the use of the mechanisms shall be supplemental to domestic action and that domestic action shall thus constitute a significant element of the effort made".
	"Supplemental" and "significant" suggest that a figure of well below 50 per cent would be acceptable.
	At this point, I would like to say something about the reporting of the UK's net carbon account. There is a need for full disclosure in the reporting of the reduction in emissions from one period to the next. By that I mean disclosure of how much of the change is due to the UK's domestic emissions, how much is due to carbon trading—both of credits and debits—and how much is due to the taking of credit for developing-world projects. That would offer some transparency to the process. We have tabled an amendment to that effect, to which we shall come later.
	What is the right percentage? We have lots of different ideas in the Committee today. Should it be the same percentage throughout the 42 years? That was referred to by the noble Lord, Lord Turner. There may be merit in tapering the percentage over the period. Initially, companies would need to trade carbon extensively until they got their own house in order. If they failed to do so and as their allocated cap reduced year on year, the cost of trading carbon would become prohibitive, until price forced them to take action. For an example of tapering, let us take the figure of 40 per cent suggested by the noble Lord, Lord Puttnam. You could have something like 40 per cent in the first 10 years, 30 per cent for the next 10 years, 20 per cent for the next and 10 per cent for the remaining. That example averages out at about 25 per cent for the 42 years, which is coincidentally the same figure as I plucked out of the air at the beginning of my remarks. However, if there is to be any tapering, it should be for the committee to decide.

Lord Campbell-Savours: The noble Lord is talking about a mechanism for tapering. Surely the market will determine that.

Earl Cathcart: It may well, but the climate change committee could decide on the mechanism for tapering in carbon trading. Buying indulgences abroad may increase as years go by but, by having a tapering mechanism in place, the whole thing would reduce.
	I said earlier that we should not put a percentage into this Bill, as we would only be guessing. The setting of limits for carbon credits should be left to the committee of experts. Indeed, I understand that Brussels is currently looking at setting those limits centrally, so it would be entirely inappropriate for us to put a limit in the Bill before the EU had deliberated. Doing so would make our position inflexible—another reason why the setting of limits should, we believe, be delegated to the committee so that it can look at all the facts and evidence. We have tabled amendments to that effect, which we shall debate later.

Lord Rooker: We have had an interesting debate, although there is something very British about noble Lords queuing up to say how innumerate they are. We are all pretty numerate, but it is a matter of trying to explain the figures in a forum like our Committee, when we lack the good communications technology that the Committee on Climate Change will certainly have. I freely admit that we shall return to some aspects of this important debate, as some of your Lordships have said. The significance of this matter is such that I have here a speaking note of 11 pages; however, I shall start by sharing its very last sentence with the Committee.
	One or two Members of the Committee have asked how the Government can prove that we are determined and committed to decarbonising the UK economy. From that point of view, the Bill needs more clarity. We will take that aspect away to see how we can modify the Bill to make it absolutely clear that we are committed to that decarbonisation. That is what underlies it: we are all agreed on trading. The only reason that people might oppose trading on principle might be if we are not committed to doing anything ourselves. The very last sentence of these 11 pages says that in view of the opinions expressed, we are certainly prepared to take the Bill away to see how we can clarify our commitment.
	I do not propose to use all 11 pages; that was just to frighten your Lordships. However, I want to answer the discussion on the amendments which, as they were put to us, have been incredibly interesting in getting the debate going. It will also be useful for our debates on other amendments. Domestic action is crucial and, if I have not made this clear, I want to emphasise that we recognise the importance of reducing our emissions within the UK. We are committed to the international principle of supplementarity, which states that the use of international mechanisms should be supplemental to domestic action. The latter should, therefore, probably constitute the significant element in our efforts to meet our targets.
	For example, the 2007 energy White Paper, Meeting the Energy Challenge, sets out an ambitious and far-reaching programme of action across the economy to reduce our own emissions. Our projections are that it would put us on track to reduce carbon dioxide emissions—through domestic action and the EU Emissions Trading Scheme—by between 21 and 26 per cent by 2020. We recognise that further action will be needed. However, as I have said before, a tonne of carbon is a tonne of carbon wherever it is emitted. The international trading has significant benefits in reducing the cost to the world as a whole in tackling climate change, by providing the finance needed for developing countries to move to a low-carbon development path. It also underpins the global system that we simply must have if climate change is to be tackled. The question that we must ask, therefore, is: how are we to get the right balance between domestic and international action to reduce emissions over time? We are talking about a fairly long timescale.
	The amendments proposed would take different approaches to that balance. When debating and scrutinising a Bill, it can sometimes appear as though amendments to one part of the Bill are somewhat contradictory to those in other parts. That is easily done—I have done it myself when in opposition—and there is nothing wrong in it. We are here to scrutinise, so I make no point on principle that, because an amendment takes one view, a political party is therefore being contradictory or changing its mind.
	However, I will deploy the amendments in turn. While the amendments take different approaches, we do not accept that they capture the complexity of the situation or the fact that this picture will change considerably before 2050. For instance, within the EU, surely we can expect the European Commission to come forward with proposals to change how the EU Emissions Trading Scheme operates? Meanwhile, internationally, as the Committee will be aware, discussions on the post-2012 framework have been taking place in Bali—and their outcome is difficult to predict.
	Amendment No. 25 would place a limit on the use of carbon units of 30 per cent
	"of the difference between the 1990 baseline and the annual equivalent of the carbon budget".
	Carbon budgets will get smaller over time, as we reduce emissions towards our 2050 target, so the difference between the 1990 baseline and the carbon budget will increase over time. This amendment, therefore, would mean that the number of carbon units allowed would increase over time. Under Amendment No. 25, if the 2050 target was set as at least an 80 per cent reduction, as many of your Lordships have proposed, this amendment would mean that the limit on the use of carbon units was higher than the budget itself. That is because the level of the carbon budget would be, at most, 20 per cent of the 1990 baseline in 2050, while the number of carbon units allowed would be 30 per cent of 80 per cent, which is 24 per cent of that baseline.
	Amendment No. 27 would limit the use of carbon units to 30 per cent of the carbon budget, so, over time, as that budget gets smaller it would mean that the number of carbon units allowed would decrease. As one of your Lordships has already mentioned, that is therefore the opposite approach to that taken by Amendment No. 25.
	Amendment No. 111 would place no explicit limit on the quantity of carbon units that may be used; instead, it says that if we are going to use carbon units, no more than 5 or 10 per cent of them can be from overseas. In practice, the vast majority of carbon units credited to the net UK carbon account will come from elsewhere in the European Union and from the international carbon market. This amendment would, in practice, make it difficult for us to use any carbon units to meet targets and budgets. That may not have been the intention, but I am trying to explain the practical effect.
	I now have about seven pages extolling the virtues of emissions trading schemes and their importance. I think everyone understands that they can have an importance, particularly in providing aid to developing countries. I will save these for other debates, showing that I have learnt a thing or two during the past 30 years while going through each House in succession.
	None of this is to say that this debate is not important. We are all grateful to the noble Baroness, Lady Miller, for letting us have this crucial debate early in the Committee's proceedings. The Environment Audit Committee in the other place looked at this very issue and concluded that,
	"this must not become an 'either/or': the Government should ensure that the UK's targets are sufficiently challenging that they drive decisive emissions reductions at home and abroad".
	We are already committed to looking at tightening up our 2050 target, as we said at Second Reading. There is a general consensus on that question. We all recognise the need to meet our international obligations under the principle of supplementarity, and we have every intention of doing so under this Bill. However, as your Lordships have said, the situation is complex and not the easiest to explain. That is why we are proposing and asking the Committee on Climate Change for each budget period on an ongoing basis to provide advice on the appropriate balance between domestic, European and international action. This is a flexible approach that recognises that the international climate change framework will look very different in 2050 from how it looks now—although I was taken by the point made by the noble Lord, Lord Oxburgh, on not leaving it all to the Committee on Climate Change in this respect: there are other aspects of this for business. The noble Lord made a telling point.
	For those reasons we would like to take this concept away to see where we can clarify in the Bill—although I do not identify where that will be—that we are committed to decarbonising the UK economy. We obviously want to decarbonise the world economy at the same time, but the fact of the matter is that we do not want to do one of those things by hiding behind the other. That is the point that we need to come back on, and we are grateful for the debate initiated by the noble Baroness.

Lord Puttnam: On this question of clarity, because I am a rather sad person, I looked up the Oxford English Dictionary definition of supplement and supplementary. It states clearly that it is to furnish a supplement or to supply the deficiency. If I heard my noble friend correctly, he helpfully said "the significant", rather than "a significant". This type of tautology frightens the life out of me. Will he help me with my slight crisis and go to the extent of using the words "the majority"? Would the Government be prepared to instruct the climate change committee that the majority of carbon savings would be achieved from domestic action? I stress that because successive Governments will come under the hammer on this. Getting behaviour change through will not be politically popular, but I am desperately trying to cling on to something here that ensures that the government of the day are required to take relatively unpopular actions for the benefit of the country as a whole and in the longer term.

Lord Rooker: That is a question to which, in all honesty, I should be able to say yes, but I cannot do that here tonight; I shall have to take the matter away and come back on it. I wanted to come back to the point the noble Lord raised. I do not normally follow notes and read out narrative. I have always said to officials, "If there are words that you want me to use precisely, put them in bold and I will use them". This time around, I changed the words as I used them, because, conscious of the debate that I have just heard, I said—and I shall read it again—that,
	"we are committed to the international principle of "supplementarity" which states",
	in bold letters,
	"that use of international mechanisms should be supplemental to domestic action and that domestic action should therefore constitute a"—
	I then said that perhaps it should be "the"—
	"significant element of our efforts to meet our targets".
	So I am with my noble friend on that; it is a question of how we can do it in the Bill. I hope that I have said enough in this debate for my colleagues in the department—the climate change Ministers for whom I am masquerading as their spokesman on earth, while we still have one. We will take the issue away, because I shall have to come back with something solid that I can get the House to accept, otherwise it will force its will on the issue. We want to be practical about this and the answer to my noble friend that I should be able to give is "yes", but I am in no position to do that tonight. I will go away and see whether I can come back with that answer.

Lord Crickhowell: I had not intended to intervene again, but I think that the recommendation of the noble Lord, Lord Puttnam, was soft and was not nearly tough enough. Supplementarity has been interpreted consistently by the European countries as meaning at least a half. That is where we are now. There is a general view that it must be a good deal tighter than that. I said that I do not think that we can decide on the exact percentage, but following what the noble Baroness, Lady Young, said earlier, we have got to give a clear steer to the climate change committee on this issue which cannot rest on the existing definition of supplementarity or the interpretation of it. It has to be tougher than that. I intervene only because, while I nearly always agree with my former chairman who chaired us admirably on the Joint Committee, for once he was not being tough enough. I would like to be a good deal tougher in giving our steer, however it is devised, so that the climate change committee, in coming to specific recommendations, understands perfectly that the international and the national issues must be taken into account, but the national issues must be a very substantial part of the contribution.

Lord Rooker: That is a classic case of hard cop/soft cop and I am the victim.

The Earl of Caithness: I was grateful for what the Minister said. This is a fearfully complicated, but essential, part of the Bill. My memory goes back to the issue of CFCs, when we had the distinct advantage of an international agreement. When I was in the Department of Environment, British industry bleated at my door regarding the extra cost that it would face. The noble Lord, Lord Puttnam, is absolutely right. We all agree on this principle in this Chamber, but implementing it on the ground, when one has seen the results of Bali and that some countries are not signing up to targets, will be very hard for British industry.
	Having listened to the debate, I am coming down in favour of the need, as politicians, for us to set a target in the Bill. That was not where I started from, but it must be made clear to British industry that we expect it to deliver, often when others will not deliver initially—I think they will catch up. We are going to ask Britain and British industry to take a lead with all the costs that that involves. As politicians, it is our duty to put something in the Bill, but I would like to back that up, rather like we did in Clause 1, by an "at least" and then leave it up to the Committee on Climate Change. As everyone in the Committee has said, this will change. In 10 years' time we will be talking a totally different language from a different position, but we have to start this ball rolling now. I am grateful for what the Minister said; we should strengthen the Bill and put a figure in and, as my noble friend Lord Crickhowell said, give clear guidance to the committee.

Baroness Miller of Chilthorne Domer: I am immensely grateful to all noble Lords who have spoken, because they have eloquently expressed a principle that I did not express when I rather dryly introduced these amendments. The noble Lord, Lord Crickhowell, is quite right to say that their correct place would have been in Clause 22, but I really could not see how we could get through Clauses 5 to 21 without debating this important principle. I am extremely grateful to the Minister for his positive reply in recognising the principle and saying that the Government will take the issue away and look at how this might be incorporated in the Bill.
	Several noble Lords, including the noble Lord, Lord Turner, the noble Baroness, Lady Young, and the noble Lord, Lord Oxburgh, spoke about the necessity of certainty for business. British industry will be floundering without that certainty. Will we in this House start to look at putting in a target as some sort of percentage as a starting point for the climate change committee or will we simply leave it as a principle? I am glad that we will have a break and that we can come back to Clause 22 for a second round even before Report stage.
	For me, this was one of our most exciting debates because it has concerned an issue of immense principle. We are not talking about just British industry, but the international dimension, as my noble friend Lady Northover mentioned. I am very grateful to the Minister for his reply. It will not be easy to come up with either a percentage or a taper. I agree with the noble Lord, Lord Crickhowell, that this decision will not be easy to arrive at. Are we the correct people to take it? However, we are the correct people to set a principle and that is what we are moving towards.
	Once again, I thank all noble Lords who have spoken and particularly the Minister for his positive reply. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Crickhowell: moved Amendment No. 26:
	Clause 4, page 3, line 8, at end insert—
	"( ) In the event of the net UK carbon account for a budgetary period exceeding the carbon budget the Prime Minister must, within three months, prepare a compliance action plan so that the shortfall is made up in the following commitment period, or identify other compensating actions to remedy the failure, after consultation with the Committee on Climate Change."

Lord Crickhowell: Amendment No. 26 stands in my name, the name of my noble friend Lord Caithness and the noble Lord, Lord Teverson. When I was in Moscow last week and my noble friend moved my amendment to Clause 1, the noble Lord, Lord Woolmer, said that taking a series of amendments in isolation from the others can create problems. I am afraid that here we cannot take the clauses and amendments in isolation. I am going to have to refer back to my original amendment which was proposed by my noble friend Lord Caithness. I do not intend to weary the Committee by going into it in too much detail because I am pretty confident that we are going to have to do that again at Report. None the less, some very interesting things were said. On reading the debate, I was puzzled by something that the noble Lord, Lord Rooker, said but I think I am now clear that it was either a misreporting in the Official Report or one of those slips of the tongue that we are all guilty of when we are speaking off the cuff. He said of the amendment which was then being debated:
	"It seems to have been thought that the intention of the amendment was to address the perceived lack of enforceability of this requirement or duty to meet the targets and budgets in the Bill. It was not drafted for that purpose".—[Official Report, 11/12/07; col. 163.]
	As I drafted the amendment I was not at all sure that the Minister was the man to tell me what its purpose was. It was exactly the purpose but then I realised that the word "it" should have either been "the Bill" or "Clause 1". It is clear from what he said subsequently that the noble Lord, Lord Rooker, was referring, as he had at Second Reading and as he did several times during his response to the debate, to the fact that Clause 1 was not a provision that was to be treated like going through a red light or over the speed limit and getting a fine. That is not the kind of penalty that is implied; the penalty is parliamentary opinion, the court of public opinion and the opinion of business. He made it clear that one of the prime objects of the drafting of Clause 1 had been to change the whole approach of civil servants, Ministers and the Government because they believed they were dealing with a legally enforceable clause.
	The noble Lord, Lord Rooker, as he so often does because he does not always stick to the brief even when it is not 22 pages long, speaks with a degree of freshness and frankness that we all appreciate. He gave some very good reasons why it was not going to be enforceable in the way of being taken to judicial review and he gave a very clear description of the fact that this was going to be a question of a range of policies across government. It is exactly that kind of situation that the courts are not going to intervene in. They are not there to decide that policy is wrong, let alone that a great interacting set of policies has been wrong. They usually intervene only if they feel that the decision has been taken entirely in the wrong way or that there is a clear breach of a straightforward law. That is why unfortunate Home Secretaries in all Governments seem to fall foul, because they can be pinned down on a single provision concerning, say, immigration legislation or something of that kind. The Government's intention is to change the whole approach of Government and make them think that this is a serious matter. I am a little sceptical, as was the Joint Committee, with the view that civil servants and Ministers will dramatically change their approach in this way. The Joint Committee was so concerned that we thought there must be some kind of procedure that would mean that the Bill had teeth if it was not going to be policed by the courts.
	I was extremely careful about the way that I drafted that first amendment to link it to Clause 4 which sets out the arrangement for setting targets and budgets over five-year periods. My reason for wanting to link it clearly to Clause 4 is that we are entering a rather different area. While it is almost inconceivable that a duty to see that something happens in 30 or 40 years hence can be enforced, with five-year budgets you are talking about much more limited periods and you get the results quite quickly. I could even envisage circumstances arising from Clause 4 where the courts might be prepared to intervene. The Front-Bench spokesman for the Liberal Democrats—I cannot remember who it was—earlier referred to aircraft policy and airport policy. I can just conceive of a budget and target having been prepared. The Department for Transport, which does not always seem to be quite as interested in these issues as Defra, might come along with a new policy for building runways that might conceivably be held to be in breach of the statutory duty. But I would rest on that, which is why I have moved this amendment.
	The Joint Committee, having expressed its doubts, took up the extremely valuable contribution of the noble Baroness, Lady Young of Old Scone, who, coming to the same conclusion that we needed some system of enforcement, came forward with a series of proposals and recommendations. The committee reached a conclusion on page 41 of its report that it had,
	"astrong preference ... to introduce a compliance mechanism within the Bill that will give both meaning and strength to the duty to 'ensure' by compelling the Secretary of State to redress any failure to meet a target or budget, where necessary through court intervention based on the compliance mechanism".
	We went on to follow the example provided by the Kyoto Protocol compliance procedure. That principle establishes that if,
	"a carbon budget is exceeded ... the excess emissions are deducted from the carbon budget for the subsequent period".
	In other words, since it is clear that they have failed to achieve their target, the Government have to come forward immediately with a detailed plan which they will put to Parliament as to how they are going to put it right in the immediate period that follows.
	That is just one of the possibilities but one can think of others. The noble Baroness and her colleague Mr Clive Bates gave evidence to us on this subject on days 50 and 51 and elaborated on other perhaps even tougher possibilities, such as forcing the Government if they fail to meet their targets to purchase emission allowances on the international carbon market, investing in a domestic carbon reduction fund at an agreed price per tonne of carbon, and a number of other possibilities.
	I have not elaborated on the other possibilities in my amendment. At this stage, I think it is quite enough simply to pick up the recommendation of the Joint Committee. However, if we are to have a Bill that has teeth, surely there must be a compliance mechanism. It is no good for the Government to say again and again that this is a legally enforceable Bill and that the courts will intervene and perhaps impose even tougher penalties than I am talking about. No one believes that. None of the outside interested bodies which strongly support the Bill believes that, and there is a real danger of everyone concerned being embarrassed when the world outside realises that we have no means of making this a legally enforceable Bill. Where will we be then, as we set our moral example to the rest of the world?
	Therefore, I say that there is a compelling need for a compliance mechanism in the Bill. I do not say that the single solution that I have offered in the amendment is the final answer, although I go on to refer to other possibilities. When the noble Baroness, Lady Young, and her colleague came before the Joint Committee, I asked them to work up some more detailed ideas and to come forward with other specific recommendations on the way in which we might proceed down this road. I hope that in due course, if not today, we shall hear about some of those proposals. However, I urge the Government to accept the Joint Committee's strong recommendation for a compliance mechanism. I beg to move.

The Earl of Caithness: I support my noble friend on this amendment. I was saddened by the Government's response to the Joint Committee's recommendations on this matter. The most that the Government managed to come forward with was the statement that they were proposing to amend the Bill to require the Government to explain in Parliament why they had failed to meet the carbon budget. However, that is not good enough. When one has a budget of this nature, it is unacceptable to say, "These are the reasons why we have not achieved it", and then to sit down and do nothing about it. The whole point of the amendment and the Joint Committee's recommendation was that something had to be done about it. The Government argued in their response that, if there were a compliance mechanism, it would be likely to weaken the statutory result from a judicial review. I do not think that that is right. I do not think that a judicial review will be very likely to happen under this Bill, for all the reasons given by my noble friend Lord Crickhowell. However, a compliance mechanism is necessary, just as it is with the Kyoto agreement, and it should be very simple. In it, the Government should set out exactly how they are going to remedy the situation in which they find themselves.

Lord Campbell-Savours: I want to intervene briefly. As I said before, I was not fortunate enough to be a member of the Joint Committee which produced this extraordinarily good report, but I have followed the debates fairly closely.
	I, too, believe that there is a need for a compliance mechanism. What interests me is that the amendment talks about the budgetary period, and that period is not one year but five years. That being the case, if action were not taken at the end of the budgetary period, that would almost be negligent. One would have thought that there was an absolute responsibility to ensure that at least at the end of every budgetary period, irrespective of what had happened during the years comprising the budgetary period, we were on line to meet our long-term targets by 2005. Therefore, in principle, I accept the proposal in the amendment and I hope that, similarly, my noble friend can go down that route. He may argue with the wording to some extent because it implies a certain element of discipline in relation to the process by which the penalties, if I may call them that, might be introduced, but I am sure that he will find a way round that.

Lord Teverson: I put my name to the amendment because I also felt that there needed to be a positive outcome if budgets failed to be met, and this seemed to offer a very practical and focused way forward. As I think I have said before, it is very nice to think of the Secretary of State of the day being dragged away to the Tower of London because the targets have not been met, but that will not happen. Judicial review might happen but that process would not contribute greatly to what we want to achieve here, which is to ensure that we meet our longer-term targets. The amendment or something like it would do that very well; hence, I am very happy to support it.

Baroness Young of Old Scone: I, too, support the principle of a compliance mechanism. I am very grateful to the noble Lord, Lord Crickhowell, for speaking so glowingly about some of the ideas that were put forward when we gave evidence to the Joint Committee. However, the nature of a compliance mechanism is not necessarily captured by this amendment, as we need something that will drive change.
	We are a bit adrift from our trajectory for meeting current targets, and no amount of words of commitment to meeting targets will address that. Practical measures are needed, and that probably means new policy and perhaps new investment. That is why I thought that the proposition put forward in the evidence sessions to the Joint Committee that I helped to present was quite neat and cunning. I shall not go into it in great detail, save to say that under the proposed compliance mechanism, if the targets at the end of the five-year period were not met, the Government would have to buy enough international credits and make sufficient contributions to a domestic fund to meet the gap. In that way, we would be clear that new funding was going into the system to help to drive reductions. The most important thing there would be that a UK-based fund would be used to help to implement carbon reduction technologies within the UK faster than would otherwise have happened. Clearly, there would be a need to be fast because the target had not been met. The intention behind our proposition was to say, "Let's find a way that asks the Government not just to report on what else is going to happen but to put their money where their mouth is and drive change for the future".
	I am sure that there are ways in which that could be worked up and elaborated on by those who are better at these things than I am. However, it seems to me that judicial review will clearly not be enough, and if one asks what the sanction is for non-compliance and judicial review is offered, that will clearly not do the trick. Therefore, if the sort of cunning proposal that I described is not the answer, we must put the Minister on the spot. The Secretary of State for the Environment and the Prime Minister are currently making very strong statements about the Bill being a legally binding provision, but can the noble Lord say how the Bill will be given teeth through a more effective compliance mechanism?

The Duke of Montrose: I add my support for my noble friend's amendment. The Minister said that the Government are committed to decarbonising the UK economy but one needs to think back a little to the words of the noble Lord, Lord Campbell-Savours, and the fact that there is no sanction for this whole issue. In 30 years' time when our children or, dare one say it, grandchildren are looking at this problem, if it is suddenly decided that the whole thing is a lot of rubbish and there is no sanction, they could just sit back and not implement any of it. That would be a very different day from today when all those who have spoken are convinced that something needs to be done.
	These amendments place a duty on the Prime Minister and the reporting mechanisms to recommend ways of remedying shortfalls in carbon budgets. Our position is that the Bill does not have provisions for making plans on how to overcome the problems that might arise if the budgets are not met. We cannot be blinded by optimism, which is why we feel that the Bill needs to stipulate that a plan will be put together to remedy any shortcomings in the carbon account.
	I speak to Amendments Nos. 87 and 93. The risk is that we will get behind. It stands to reason that, should the report find that the Government have done rather poorly in their attempts to reduce carbon emissions, a new strategy might be in order to take into account previous failures in efforts to get back on track. That would increase the transparency and open the Government's action up to deeper parliamentary and public scrutiny. Any plan to remedy the shortfalls would involve an assessment of the reasons why the Government had not met the target. This fits into our more general theme of beefing up the committee and making the Bill more robust. A roll call of how we had missed targets would be inadequate to face the challenge of climate change appropriately. A duty to have a plan to remedy any shortfalls presented when the report is given would go some way to strengthening the Bill.

Lord Davies of Oldham: I am grateful to all noble Lords who have spoken in this debate. I suffer from the same disadvantage as the noble Lord, Lord Crickhowell, as I missed the previous day in Committee because I was otherwise entertained on the Dormant Bank and Building Society Accounts Bill. I recognise that these issues were discussed earlier in Committee and I have no doubt that we shall return to them again because the Committee shares a determination to have an effective Bill that brings about the points that the noble Baroness, Lady Young, emphasised. The Government share her reservations about what is being proposed in this amendment and will take on board what she said as a potentially fruitful line of inquiry.
	In the previous Committee sitting my noble friend Lord Rooker agreed to look at whether another form of words could describe what we want to do here without weakening the Bill. The problem with the amendment moved by the noble Lord, Lord Crickhowell, and supported by other noble Lords is that the Government could be challengeable in law if it were thought that they were neglectful of their obligations, and there would be a risk of judicial review. Although other Members of the Committee indicated that that ought not to worry the Government unduly, it will worry them because the remedy would be at the discretion of the court. It may be that the court would do what it often does in these circumstances and would issue a declaration to force the Government to reconsider their action. However, we cannot rule out the possibility of the court making a more stringent order, such as ordering the Government to purchase credits to remedy the position. Although such sanction would certainly meet the objective of the noble Lord, Members of the Committee will recognise why the Government cannot take this proposal lightly. We are facing real issues in compliance although we entirely subscribe to the general wish articulated on all sides of the Committee.
	As has been recognised on all sides of the Committee, we have strengthened the Bill's provisions to ensure maximum transparency about whether a budget or target has been met. For instance, Clause 14(3) requires that if a budget has not been met the Secretary of State must explain to Parliament why that was the case. In addition, Clause 28(2) requires the Committee on Climate Change to set out in its report to Parliament its views on the ways in which the budget for a period was or was not met. The Bill therefore ensures that there is ample opportunity for scrutiny and debate if a budget is not met.

Baroness Byford: I have followed the debate very carefully and I was not intending to speak. However, unless I misunderstood him, the Minister has indicated in his response that the Government are not prepared to put stronger compliance mechanisms into the Bill because of the threat of judicial review. Are the Government no longer taking responsibility for driving the Bill forward as the noble Lord, Lord Rooker, indicated earlier that they wished to do?

Lord Davies of Oldham: My noble friend indicated that he wants to see the Bill and the policy driven forward. We accept the representations of the committee on that point. If it is suggested that the Government would not take sufficient action, the Bill provides that shortly after setting a budget the Government will have to publish a programme setting out how it will be met. We have already made it clear that it will be laid before Parliament. The Government will be under an obligation to make regular annual reports on progress to Parliament and to the independent Committee on Climate Change. It will be abundantly clear to everyone interested in these issues—and it is difficult to think of a person in the land who would not be interested in them—whether the net UK carbon account is being reduced. The Government will be in the court of the nation. An independent committee will identify any deficiencies and Parliament will express its views on these matters. That is bound to be an enormous commitment by the Government to effect the necessary change.
	The noble Lord, Lord Crickhowell, was his usual modest self when presenting the amendment as one possible solution to what we all recognise is the difficult area of guaranteeing what has to be the result of effective action in many quarters. We are saying that we do not accept using the law and judicial review as mechanisms to solve the problem. As my noble friend said when these issues were previously discussed, we have taken on board the representations, which have been made again today, that we need to look at the provisions in the Bill for compliance.

Lord Campbell-Savours: I cannot understand why the Government are resisting this. Under the Bill the committee has only an advisory responsibility, and the Government can ignore the committee's advice if they wish. If at the end of a five-year period there was a conflict between the committee and the Government about the action required, we might find that there was a shortfall irrespective of whatever recommendation the committee has made during that period. What mechanism would then exist to ensure that we went into the next period with a policy to deal with deficits from the previous period?

Lord Davies of Oldham: My noble friend may be underestimating the significance and power of the committee. While it is an advisory body, it will be the custodian of the nation in terms of the effectiveness of government policies and others in achieving the reduction in carbon count and therefore will have an immensely powerful role to play. Therefore, a Government who are effectively being arraigned before Parliament by the committee for having failed to run an economy that met the identified targets would be subject to severe sanctions. We are prepared to look at extending sanctions in addition to the powerful provisions that are already in the Bill. However, the Government cannot accept the particular strategy outlined in the noble Lord's amendment for the reasons that I have identified.

Lord Crickhowell: I find that a curious and contradictory response. The noble Lord tempts me to go back to the debate that was held in my absence last week on the question of whether there is likely to be a judicial review. I shall resist that temptation in the knowledge that I will have the opportunity to address the issue at Report stage, and I certainly intend to take it then.
	The noble Lord said that he envisaged the possibility that the courts would order the Government to purchase credits. That scenario is even more improbable than one in which they make a judgment about the legality or otherwise of the Government's actions. But much more interesting was the noble Lord's initial comment that he shared the reservations expressed by his noble friend Lady Young of Old Scone about my amendment. She welcomed the amendment but said that it was basically not adequate. She wanted to go further and have a tougher mechanism. Indeed, she referred to the very mechanism which I had just mentioned—that proposed by her colleague Mr Clive Bates to the Joint Committee. That mechanism would have required the Government to purchase credits and then to create a fund for domestic mitigation to reduce emissions in the domestic economy, and thus bring us back down to the domestic threshold. I thought it was a little unkind of her to chastise me for not having produced an amendment on those lines. I would have done so if I had had a suitable draft. Indeed, I asked in the committee for the Environment Agency to work up its ideas and bring forward a suitable amendment, and to include in its analysis what the consequences of the Government acting in this way would be for UK industry and for the performance of individual organisations and so on within the economy. I did not think that I had the skill to draft that particular amendment myself.
	The Minister said that he did not think that my amendment was adequate and that the Government would consider whether they could come up with a tougher and more effective provision. They would be capable of drafting something along the lines proposed by the noble Baroness, Lady Young of Old Scone, so I look forward to their production of a tougher compliance mechanism. However, the more I listened to the noble Lord, the more confident I became that we must insist on including a compliance mechanism in the Bill. I shall certainly try to ensure that an even tougher set of ideas are included in any amendments that I propose at Report. For the moment, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendments Nos. 27 and 28 not moved.]

Lord Rooker: I beg to move that the House do now resume. In doing so perhaps I may suggest that the Committee stage do not begin again before 8.44 pm.

Moved accordingly, and, on Question, Motion agreed to.
	House resumed.

Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2007

Lord Bach: rose to move, That the draft regulations laid before the House on 28 November be approved.

Lord Bach: My Lords, these amendment regulations make some modest amendments to the Conduct of Employment Agencies and Employment Businesses Regulations 2003. The regulations govern the conduct of the private recruitment industry in Britain. This industry has grown in recent years and agency work plays a key role in our flexible labour market. The great majority of employment agencies are reputable businesses that comply with the regulations and treat their workers fairly. While the conduct regulations provide a satisfactory basic framework that balances the interests of agency workers, agencies and hiring businesses, we need to take account of those agency workers who may be more at risk of being denied their rights and less able to protect themselves.
	The Government's labour market strategy paper, Success at Work, published in March last year, identified a number of areas of abuse affecting vulnerable agency workers that we wanted to tackle. We have now consulted on these proposals and taken account of the many helpful responses to that consultation. The amendment regulations set out a series of practical measures to address abuses affecting vulnerable agency workers without adding to the burdens of legitimate agencies that would never mistreat their workers in this way. In fact, the amendment regulations also include a deregulatory measure that reduces the burdens on agencies that supply workers on very short-term assignments. In addition, by taking action to outlaw some bad practices carried out by disreputable agencies, we will benefit the law-abiding agencies which suffer from unfair competition from those who cut corners at the expense of vulnerable workers.
	I should emphasise at this point that it would be quite wrong to suggest that all agency workers are vulnerable. Most agency workers are neither vulnerable nor exploited. Similarly, some employees on permanent contracts are undoubtedly vulnerable and subject to treatment that all in this House would condemn. The amendment regulations are therefore practical measures to address some key abuses affecting vulnerable workers.
	We are proposing three main changes to the Conduct of Employment Agencies and Employment Businesses Regulations 2003. The first of these will give agency workers a clear right to withdraw from accommodation, transport or other services provided by their agency without suffering any detriment. It is important that if an agency worker is using such services, they can choose to do so on the basis of their own free will. While a lot of the services that agencies provide are of benefit to their workers, I am aware of others that are not. These include instances of accommodation that consists of a space in a shared room in an overcrowded house at an exorbitant rent or transport that costs far more than could be obtained in the open market. These abuses tend to affect migrant workers, but can also apply to indigenous agency workers. While it is already an offence to make an offer of work conditional on an agency worker paying for other services such as transport or accommodation, we are now proposing to strengthen this provision by giving agency workers a right of withdrawal subject to a period of notice without suffering any detriment. In that way, agency workers will not be tied to services that do not represent value for money.
	These extra rights will be backed by additional resources for enforcement. It has been suggested to the Government that not enough inspectors are working for the Employment Agency Standards Inspectorate and that their numbers should be increased, and the Government have responded to these representations. In September, the Secretary of State announced plans to double the number of inspectors. In addition, the inspectorate will be given stronger investigative powers through the forthcoming Employment Bill to enable it to identify the scale of any non-compliance, and the potential penalty for breaking the law with regard to agency workers will be raised to an unlimited fine.
	The second major change will affect the taking of fees from would-be entertainers and models for including their details in publications such as casting websites and model books. Such publications are used by entertainers and models to help them obtain work. There are too many instances of unscrupulous individuals advertising for would-be actors or models to attend casting sessions and then engaging in hard-sell tactics to persuade them to pay high fees for the provision of services and the promise of work. Those wishing to enter the worlds of modelling and entertainment are often young and often inexperienced. They are vulnerable to being exploited by unscrupulous people who persuade them that they have a great future if they sign up. They are assured there will be plenty of opportunities for them to get paid work in the industry, sometimes on the basis of exaggerated claims such as the agency's connections with popular TV shows. On the strength of these claims, unsuspecting individuals are induced to pay relatively high fees, often more than £150, to include their details in the agency's publication or website.
	This practice takes advantage of people vulnerable by virtue of their inexperience. In practice, of course, the modelling and entertainment industries are very difficult fields to get into, where even talented professionals can find it hard to get work. The amendment regulations therefore increase protection for workers by introducing a seven-day cooling-off period for contracts for placing a worker's details in a publication or a website. To make this protection effective, any agency which takes a fee during the cooling-off period will be committing a criminal offence. The cooling-off period will apply to all contracts for placing an individual's detail into a publication or website, whether the individual was responding to an advertisement for a casting session or approached the agency direct. The Government's intention is to make the practice of enticing people to these kinds of casting sessions a lot less attractive. Reputable agencies do not need to use such underhand tactics and therefore will not be affected by this change. They should benefit from measures to stop such bad practices.
	We are aware, of course, that there have been calls for all such fees to be banned. We have looked carefully at the responses to the consultation on these proposals and have concluded that a complete ban would have adverse impacts on reputable publications which actors and models use to find work. Such publications are valued by those in the profession and we do not want to risk such publications becoming uneconomic.
	The last significant change in these amendment regulations will benefit agencies by reducing administrative burdens. Where agencies supply workers for short-term assignments of five working days or less, they will no longer have to provide written information provided that they have obtained all the required information from the worker and provided that the worker has already received information about the hirer and that information has not changed. This change should save agencies an estimated £6 million per year. It will particularly benefit agencies in the catering and hospitality sector or agencies which supply interpreters and supply teachers, where assignments are typically very short. This deregulatory change will not reduce the level of protection to workers as the reduced, lighter information requirements for these short-term assignments will only be available where the agency has already provided the essential information in their terms and conditions.
	The measures we are introducing in these amendment regulations are practical measures to address key abuses affecting vulnerable agency workers while also reducing the burdens on the great majority of legitimate agencies. I beg to move.

Moved, That the draft regulations laid before the House on 28 November be approved. 3rdReport from the Statutory Instruments Committee.—(Lord Bach.)

Baroness Wilcox: My Lords, most of these regulations merit our support, except regulation 7 which seeks to tackle a persistent defrauding of aspiring actors and models by bogus recruitment agencies. As the Minister said, very often these are young hopefuls who are being ripped off by as much as £100 or £200 a time. It is a practice which preys on people's hopes and dreams and it is legal because of a loophole in the 2003 conduct regulations which we are trying to amend.
	The question is whether the proposal before us will do what the Government originally promised—to stamp out the practice in question. Regulation 7 would amend the original regulation by providing a seven-day cooling-off period for payment after a casting session and would entitle a work seeker to back out of any contract signed without penalty. We have been presented with a well-intentioned and, on the surface, reasonable suggestion that the provisions will improve things. However, they will not prevent the scam from occurring in the first place or address the central problem that it is often weeks, sometimes months, after the original event that people realise that no work is forthcoming.
	The reactions to the Government's propositions have been quite negative. The first negative reaction was from the Equity spokesman who said that he was absolutely livid with what was happening. Mr Spencer MacDonald, the principal representative of the Broadcasting Entertainment Cinematograph and Theatre Union, said:
	"We are deeply disappointed because we have been hammering away at the Department of Trade and Industry for a number of years and we thought they were slowly coming around and understanding the problems being experienced by our members. They have not come up with the goods really—they have not delivered anywhere near what we wanted".
	Why have the Government chosen to ignore the views of Equity and BECTU on the issue? Does the Minister agree that instead of a short cooling-off period there should be a ban on up-front fees in this sector, as there is in almost any other business sector? Why have the Government turned their face against this?
	Further, will the Minister explain why the Government have rejected the eminently sensible suggestion of Equity and BECTU that a distinction should be made between directories and online information services on the one hand and genuine entertainment employment agents on the other? Such a distinction would allow agents to develop the continuing relationship with artists that they need and to charge the fee in relation to work sought, not up front. The publication side would then be clearly distinguished from the genuine process of agency. This is important. The Minister in the other place spoke about not setting up blanket bans but he had the opportunity to distinguish between the two functions. Equity and BECTU suggested that and I suggest it now.
	The rules of the House require that if we want to oppose the relevant provision in the statutory instrument, we must vote against the whole measure. We do not want to do that because the other regulations merit our support. However, I emphasise that regulation 7 is wholly inadequate. We do not want to support it and it is a great shame that Ministers have chosen to bury the proposal in such a way. As Mark Prisk, my colleague in another place, said:
	"For at least four years Ministers have recognised that there is a problem, but they have failed to act. When complaints have been made, their officials have failed to prosecute. When they have brought forward legislative tinkering and changes, those have been slow to be forthcoming and inadequate to the task. The result is that thousands of people have been ripped off over those four years while Ministers have dithered and their officials have failed to prosecute".—[Official Report, Commons, 10/12/07; col. 12.]
	I hope that the Minister can explain why he and his colleagues are happy for this con to continue. I do not believe that this is his wish but it is the net effect of what we are being presented with today.

Lord Razzall: My Lords, I share the views of the noble Baroness, Lady Wilcox. These regulations are almost entirely, with one exception, to be supported, and the points she raises on regulation 7 are particularly well made. It is not clear from the Explanatory Memorandum why the Government have gone back on their original intention. It is indicated that this is as a result of consultation, but certainly the consultation with industry leaders to which the noble Baroness referred would indicate that her points are well made.
	As she rightly pointed out, one of the weaknesses of the procedure under which we are called in the dinner hour, or in the Moses Room, to debate these regulations is that we only have the opportunity to either accept them or to vote the whole lot down; there is no provision to amend them. On an issue such as this, that makes opposition and reasonable debate more difficult.
	I repeat my congratulations to the Government and to the noble Lord, Lord Bach, over recent regulations and what now appears to be regular procedure. Whether or not that extends beyond his department to all departments, his department is to be congratulated on the regulatory impact assessment, as now appears with all regulations emanating from his department. I found it considerably more informative and helpful than the Explanatory Memorandum that used to accompany statutory instruments.
	Again, for the record, I press the Minister in general terms on a point that is dear to our hearts on the Liberal Democrat Benches, and appeared in our last two general election manifestoes: the necessity for sunset clauses in regulations. In another context, I notice, the noble Baroness, Lady Wilcox, has put down an amendment providing for a sunset clause, which we will be supporting. The Minister's department almost gets there when saying—somewhere in here—that the regulations will be reviewed in two years' time, in about 2010, to assess the benefit. That is almost a sunset clause, but does not quite have the full effect. One of the reasons that we are in favour of sunset clauses is to try and alter the culture of government, where regulation is piled on regulation.
	I also ask the Minister—although he may feel this is an inappropriate moment—if, in commenting on the regulations, he is prepared to comment on the wider issues regarding agency workers that appear to be emanating from decisions or potential decisions in Europe. He will be well aware that there is a wider context. A number of people and lobby organisations in the United Kingdom are unhappy about the relationship between what an agency worker is and what an employee is—what is the definition of an agency worker? Is he in a position to comment? Also, what about the apparent dispute between his Government and their paymasters in the trades unions on the treatment of agency workers, in general terms, flowing from potential European directives?

Lord James of Blackheath: My Lords, I agree with the words of the noble Baroness, Lady Wilcox, and of the noble Lord, Lord Razzall, but I disagree with their thinking that the regulations are wrong only in respect of regulation 7. The instrument is deficient in what it does not say, rather than in what it does say. I raised my points at the Merits Committee last week. The Merits Committee would probably have asked for the instrument to be returned to the department for further consideration had it not been for the imminence of the Recess and the desire not to interfere with process. There are three major concerns for me in the instrument. One is an important point that is not there and appears to be in total conflict with the law as it stands—on the admission of the department. The other two points are serious moral hazard issues relating to young people.
	The issue that is not there, which is strangely and apparently in conflict with the law, is that regulations do nothing to address the one area in which fees are charged by agencies directly to jobseekers. They have been charged on that basis for a great many years. The issue is that of out-placement agencies, where the recently redundant or people without jobs at the management and executive levels go to agencies that purport to obtain for them introductions to employers who will provide employment opportunity. The agency in that case generally takes a fee both from the employer who takes them on, if successful, and from the jobseeker, on a regular basis. Some of those fees are enormous. I have heard of job fees from out-placement operations exceeding £2,000 per month, rapidly exceeding the amount of redundancy upon which the redundant executive depended for the survival of himself and his family during the time that it will take him to get a job. That is a tragic situation. There appears to be no regulation and I seriously hope that with the Employment Bill, forthcoming after the Recess, we will see some attempt to bring those agencies under some regulatory control. That is very important.
	There is an issue where the principle of out-placement can work brilliantly—if it is worked as an integral part of a redundancy package, paid for by the employer that has declared the redundancy. In that case, there needs to be clarification about the taxable status of the fee paid on behalf of the executive—as to whether it is a benefit to be taxed or not. That is not clear, in practice, in standardisation. There is another case, where an employer has a large number of redundancies to declare—I myself have had cases of 2,000 and of 500 people at a time—and you mount your own out-placement operation inside. Some of the agencies are extremely good at coming into a firm and setting up an out-placement operation on your behalf. We did it at the Dome with wonderful effect. We had 2,000 young people, all being declared redundant on 31 December of the year of the Dome, and none of them had jobs to go to. We brought in a brilliant young woman, who set up an out-placement operation for us, for a very small fee. We got 1,620 job offers for the 2,000 people by the time that they left the Dome. That is an example that should be encouraged.
	We do not want the Government to write off the whole of the out-placement industry, but, please, to put some regulations in place that allow the benefits to continue and that rule completely out of order the scoundrels who are bankrupting the redundant unfortunates. I am told that it is already illegal under the Employment Act 1978 to run an out-placement operation on that basis, so why are they not being prosecuted accordingly? There is a real mystery there.
	My two questions of moral concern relate to the provision, which is recognised in the instrument, whereby an agency can take a fee for doing a block booking of a large number of agency staff to go and work, perhaps, at a sporting event—usually catering or waitress and serving staff for the hospitality and restaurants. Until recently, I have been responsible for running both the Grand National and the Cheltenham race course meetings, so I am intimately familiar with this process. In both those places, you would have hundreds of young women being bussed in from all over the country to provide the waiting staff, usually drawn from the catering colleges where they recruit whole classes. They are provided with accommodation at the locations to which they are taken. My concern with the instrument is that it now appears, according to the Explanatory Memorandum, not to allow you to terminate your short-term employment in less than five days. A lot of people, who are very inexperienced, at the ages of 15 or 16 have to have their parents' consent to go, but I very much doubt whether the parents know what they are letting them go to. These affairs are not attractive places for young people. The accommodation is very primitive and, while there are hundreds of young women together in such places, there are also hundreds of young men—staff handling the horses or all the others handling a race meeting. There is easy access to alcohol and, I fear, easy access to drugs as well. The risk to those young people of being exposed to predatory and rather intoxicated young men is really unattractive indeed.
	A number of the girls want to come home the next day. The instrument makes it far worse to get out, because you are stuck. You cannot get the transport out until the bus goes returns at the end of the week. They do not get paid for the day, so they have no pay to use to get a bus or train home anyway. There needs to be some better welfare condition built in. One of the suggestions was that there ought to be some sort of mother hen appointed to every dormitory, to look after it—that would be a good move. I suggested that to a noble Baroness on our side of the House and she said that in her young days such a person used to be known as the bunny mother, which raises some interesting possibilities. There is a welfare issue of serious concern. I have known of some young women who have gone on these affairs and been stuck there for the whole week because they could not get out and was seriously distressed by the experience. This instrument makes it more dangerous.
	My other concern relates to the famous regulation 7, which both noble Lords who have spoken so far have mentioned. They missed one of the more important and pernicious points of it, which comes in Note 24 of the Explanatory Memorandum:
	"Entertainment or modelling agencies can only charge work-seekers a fee out of earnings the agency has found for them".
	It is not unusual for model agencies to be asked to provide a block booking of 20 or more models for a party, which is part of the selection or casting process for a promotion or launch. In so doing, the agency will get a fee for providing 20 or so models to arrive at one time. The models get to go to a free party and they get paid a fee. This now says that a portion of that fee can be taken by the agency. That might seem fair enough, but it really is not because these are very impecunious young people, trying to make their way. If the fee is taken from them in part, it is not particularly nasty or dirty-minded of me to suggest that the likelihood is that they will seek to augment the depleted earnings by negotiating another fee with anybody they can find at the party.
	It is not the function of government to promote prostitution, and this is a pimp's charter. It needs seriously reviewing and readdressing because it opens up a very serious moral hazard. I think it is wrong and I ask the department seriously to consider these issues. We do not expect this instrument to be withdrawn on its course to implementation in April, but we ask that when the Employment Bill comes through, the Government give more detailed and less naïve consideration to some of the implications of this instrument.

Lord Bach: My Lords, I thank all noble Lords who have taken part in this short debate. I thank the noble Lords on the Front Bench for their overall support for these amendments. I am sorry that they do not agree with us about Regulation 7. There is room for proper debate and disagreement about the right course to take over the problem that has been identified.
	I am tempted by the invitation of the noble Lord, Lord Razzall, to go down the highways and byways of agency policy. Apart from saying that the Government continue to support the underlying principles of the EU draft directive—we want a directive that offers appropriate protection to agency workers, without damaging economic flexibility or closing off a valued route into employment for many people—it would be better not to go down that particular path tonight. The noble Lord knows that we have the thrill and excitement of the Employment Bill coming to this House for Second Reading on 7 January. I suspect that he will find a number of opportunities to debate the very interesting subjects that he has referred to. I do not say that they are illegitimate subjects for tonight, but it is not practical to go down that particular path.
	As for Regulation 7 , I cannot do more than repeat what I said in opening, and what my honourable friend Mr McFadden said in debate with Mr Prisk last Monday when these matters were being discussed in another place. We thought carefully about what was the right thing to do but came to the view that the cooling-off period was the appropriate remedy. We did not want to jeopardise, as Mr McFadden said, legitimate publications, such as The Stage or Spotlight and others, which have been around for a long time and play a legitimate and valuable role in the industry.
	We want to tackle the hard-sell tactic of inviting people to attend a casting session, and trying to take money from them on the day, often on the promise of finding work or making bogus pledges to the effect that the young person has a great chance of success. We believe—and only time will tell—that the cooling-off period will have a significant impact by allowing people to think before taking a particular route. That is not to say that the payment of a fee for inclusion in a legitimate publication is always wrong. We accept that there may be a disagreement with our judgment on the matter, but that is how we came to our conclusions.
	All the representations that we received were considered, but in the matter of distinguishing between agencies and publications there was a question over whether this could be easily done in such a way as to prevent disreputable agencies producing publications of little value and abusing the distinction. We wanted to use the cooling-off period to give people time to think without putting in jeopardy—and this is really the nub of our argument—the legitimate promotion activity that is carried out by some very long-established publications. The Minister said that he was looking at one such publication, which has existed for 80 years and performs a legitimate role in the industry. We would not want to take action that goes too far.
	The noble Lord, Lord James, who has a particular interest in these matters, was good enough to let my department know what he intended to raise, and to talk to me today about these matters. As far as out-placement agencies are concerned, I repeat that the practice he described so well is already an offence, under the Employment Agencies Act 1973. We are also proposing measures in the Employment Bill, which will increase the penalties for this offence by making it eligible for trial in the Crown Court as well as a magistrates' court. Where offences were tried in the upper court, there would be no limit to the fine that could be imposed. I invite the noble Lord, who obviously has great experience in this field, to report to the Employment Agency Standards Inspectorate any agency he is aware of that is charging such fees. We would be most grateful. I am sure that will be in his mind anyway.
	As far as models are concerned, the noble Lord will know that the 2003 regulations contain a framework of minimum standards that clients—both workers, who in this case are models, and hirers—are entitled to expect. The regulations cover measures to protect workers, the contents of terms and conditions, and steps that agencies must take before supplying workers to a hirer. Additionally and importantly, the conduct regulations require the agency to take all reasonable practical steps for the protection of the worker. The noble Lord, Lord James, said that, for workers under the age of 18, agencies are required to obtain consent from a parent or guardian before supplying them for a position where they are required to live away from home. There may be some ignorance about that, but that parents or guardians of workers under that age are required to give that permission represents a significant control. Forcing people to give sexual favours against their will, or any assault—actual or aiding and abetting an assault—is a serious criminal offence and a matter for the police. That is true also of taking illegal drugs. While we do not for a moment contradict what the noble Lord said—it would be foolish to do so—we think that remedies already exist.
	The noble Lord mentioned a third area where he believes that more should be done. As far as that area, too, is concerned, if the wrongdoing involves forcing people to give sexual favours against their will, it is a matter for the criminal law and the police. Any cases of that which come to light should be dealt with harshly.
	I hope that I have dealt with the points that were made in this interesting debate. I am sorry that I do not have the support of the House for all the regulations; I must comfort myself with the thought that we have it for the majority of them.

On Question, Motion agreed to.

Baroness Royall of Blaisdon: My Lords, I beg to move that the House do now adjourn during pleasure until 8.44 pm.

Moved accordingly, and, on Question, Motion agreed to.
	[The Sitting was suspended from 8.21 to 8.44 pm.]

Climate Change Bill [HL]

House again in Committee on Clause 4.

Lord Taylor of Holbeach: moved Amendment No. 29:
	Clause 4, page 3, line 14, at end insert—
	"( ) A carbon budget may contain amounts for particular sectors of the economy."

Lord Taylor of Holbeach: It is tempting to reprise the previous debate, but it is a running theme of all our debates in this Committee that the success of the Bill will depend on the power and authority that we give to the climate change committee. We now come to another area in which we seek to empower the committee and, in turn, put some spine into the Bill.
	This group of amendments offers provision for the climate change committee to set carbon budgets for particular sectors if it feels that it is an effective way in which to contribute to emissions reduction. They also stipulate that reports on carbon emissions should contain breakdowns by sector, such that we are afforded a clearer picture of from where our emissions are coming. This should be taken in two parts—to allow the climate change committee to budget for sectors, and the stipulation of reporting on emissions by sector. I shall deal first with the whole concept of sectoral budgets.
	There are various arguments for and against having carbon budgets broken down by sector. We have tabled the amendment allowing the climate change committee to budget for sectors without mandating that it does so or that it does so for all sectors. The purpose of this is to ensure that it considers the potential advantages of sectoral targets and is at liberty to produce budgets containing sectoral breakdowns should they prove to be beneficial.
	Budgets for sectors can be useful in targeting specific areas of the economy that are in dire need of improvement. If the net UK carbon account is considered too broadly, it risks ignoring the fact that tremendous efforts in some sectors might be mitigated by the emissions of another. They might also serve as a means of providing early incentives to the industry that emits most carbon. However, there are arguments that dictating too much from the top strips away some of the dynamism and innovation required to combat climate change effectively. The noble Lord, Lord Campbell-Savours, mentioned earlier the role of the markets in tackling climate change—and that certainly is a factor. Certain sectors might be able to reduce emissions by availing themselves of the services of others. There is a risk that it will provide too prescriptive a framework; likewise, there is a risk that a particular sector of the economy will not be as progressive about reaching targets if it feels that it has comfortably met its particular target.
	Will the Minister comment on the role of sectoral targets in carbon budgets? Does he think that they are a useful weapon and would he be prepared to see them included in the Bill, in an amendment such as this? Once again—and this repeats a theme that has run through this evening's debates—we feel that this is a decision best left to the experts on the climate change committee. I beg to move.

Lord Redesdale: I shall speak to Amendment No. 32; it follows the gist of the other amendments, which we support from these Benches. This issue has been brought up before. The Secretary of State is given the responsibility for the whole of the carbon emissions. According to the figures that I have here, the energy industry is worth 37.4 per cent, road transport 21.6 per cent, other industries 17.8 per cent, residential 14.9 per cent and agriculture is at around 15 per cent. Obviously those figures change on a year-by-year basis. Of course, road transport has its own department. Energy is under DBERR and residential under DCLG. Even though there is discussion of ministerial responsibilities, the problem for any Minister is that those other industries will have different targets. I could understand if the Secretaries of State of each department were given the responsibility and a binding target to meet the obligations that are set out, but that is not how the Bill is constructed at present. That feeds back into the argument about whether the Prime Minister should have overall responsibility.
	The issue with sectoral targets is that by giving sectors targets, each of those Ministers would have the same responsibility as the Secretary of State for Defra in meeting the obligations set out by the Committee on Climate Change. They are not easy targets to meet. We are talking about 21.6 per cent of road transport, but does anyone in the Committee believe that, because of carbon, there will be a massive reduction in road transport on that basis? There will have to be long-term policies, which are difficult to implement, as we have found. As the congestion charge has shown, it is difficult to bring about a reduction in traffic, keep that reduction static and reducing on a regular basis. On that basis, I hope that the Government will look favourably at the amendments.

Lord Puttnam: I, too, support this entire suite of amendments, which I think are rather more important than they appear. They go to the heart of several things. On page 29 of the Joint Committee report, Professor Sir David King told us that:
	"Each sector needs to know where it is expected to go and that justifies private investment funds going into these sectors".
	More interestingly, many of the witnesses we talked to were stunned that sectoral targets would not be made available. They saw it as fundamental to the whole process of accountability.
	I also had the good fortune to talk to a previous Cabinet Secretary who made it clear that the machinery of government itself would require that such sectoral targets existed within government. I would have thought that we had now reached a stage of maturity in our democracy where, if such sectoral targets exist within government, they have no reason whatever not to be made available, certainly to the Committee on Climate Change and through that committee on an annual basis to Parliament. On that basis alone, I support this suite of amendments.

Lord Campbell-Savours: I regard this amendment as particularly important because it helps concentrate the minds—in the way that I suggested on an earlier amendment—of officials and Ministers on what is actually required. While the Bill speaks in generalities about the ultimate objectives of the legislation in the long term, I wanted to find something in the Bill that was more concrete and which would be a spur to industry to respond. Setting targets against sectoral backgrounds would indicate to industry precisely where we want the changes. With the makeup of the Committee on Climate Change including, if I remember rightly, one person who specialises in innovation and technological developments, one would hope that the team that surrounds that person would also be part of generating the debate. That would be a spur to industry to follow that route.
	The target for the energy industries, for example, is 37.4 per cent—I have the same briefing as the noble Lord, Lord Redesdale. I would have thought that setting such a target would concentrate the mind on the need to go down the nuclear route as soon as possible—some of us passionately believe that—as indeed, it will send us down renewable routes and other routes that are perhaps not being fully exploited at this stage.
	I want to tell a little story. Every individual and community can make a contribution if they know that their sector has been identified. I offer as an example the block of flats where I live in London. There are 170 flats and we were arguing with Peverel, the managing agents, about how we could introduce changes in compliance with the objectives of Parliament to reduce energy. Peverel was not introducing any great changes. Last week, in desperation, I took a representative of the managing agents round all the floors of all the blocks in our development and said, "Take out that light and that light"—every other light throughout the whole development. If we deliver on the number of lights we intend to take out, the result will be to cut our energy bill from £90,000 per annum to about £45,000. That is a 50 per cent cut in a substantial energy bill in one development, which could be replicated nationally in offices, shops, residential accommodation, blocks of flats and community homes throughout the United Kingdom, and certainly in local authorities, where huge amounts of energy are being consumed.
	If you have a target area—in this case, energy combined with residential accommodation—then people will know what the expectation is in that area, and industry and communities will respond to that objective. I have taken just one area—I could speak at length on road transport and the way in which economies might be produced there—but it is only by identifying these sectoral areas as targets for change and for the reduction of energy consumption that we can realise the ambitions of the Bill.

The Earl of Selborne: I entirely agree with those remarks and declare an interest as a farmer. My particular interest is to get the land management sector to understand what a pivotal role it can and should play, not only in reducing carbon emissions, but in improving carbon sequestration. I am in the middle of conducting an exercise to determine how, in the next five years, we can reposition ourselves as a carbon-neutral producer of apples. It is a complicated concept, because so much carbon is used in refrigeration, as well as transport and marketing. It is possible, and it is an exercise that we are in the middle of exploring, but it will be possible only if we can do it as part of a sectoral target. No doubt there will have to be market incentives, and perhaps others, to encourage farmers and land managers to adopt practices for which they have not seen a need before.
	I like this amendment because it allows the climate change committee to set challenging targets. It allows policy makers to determine how best these can be delivered. They will not all be delivered by altruism—we are clear about that. There have to be incentives, and a market force. I have to say, as a fruit grower and dairy farmer, that much of the pressure is coming from our customers, the multiple retail outlets, which are extremely keen to be associated with an apple grower such as myself, who is seen to be taking the trouble to try to produce carbon-neutral apples. If this modest amendment helps everyone to get their act together, it should be commended.

Baroness Byford: I support my noble friend's amendment. It is extremely important. Often when you talk to people outside this House about what influence they can have, and what changes they can make, they say, "We're helpless, because there is so little we can do". In following the example of the noble Lord, Lord Campbell-Savours, the churches instituted an eco-congregation award about five years ago. It has made an enormous difference, and people identify with it. It is a question of trying to have legislation which makes people feel, "Yes, I can buy into that and make a difference".
	The churches have done an inventory of where their money goes. One figure that came out of some congregations was that a 1 per cent reduction in the use of heating fuel equates to a 10 per cent reduction in the heating bill, which is remarkable. I follow my noble friend Lord Selborne in his comments, too. I hope the Government will take this on board.
	I have been reflecting, since Defra was invented, on the addition of rural affairs to what used to be the MAFF brief. The rural affairs side is quite difficult because it overlaps so many departments, and in doing so, it gets lost. That is why I am particularly attracted to the amendment. If people within that sector feel that they are being recognised for good work or for trying to reduce their responsibilities in that way, they will buy into this.
	I hope that, even if the Minister does not like the wording, he will take on board the comments made round the Committee tonight. It is a great encouragement to people outside the Chamber to realise that the Bill is not just for Parliament—it is for each and every one of us to make a difference.

Lord Woolmer of Leeds: I shall also speak in favour of the thrust of the amendment, but will offer one or two cautionary words. Some sectors are self-evident, such as energy. Transport is not just one sector but a variety of sub-sectors. The climate change committee, as much as the Government or more, will have to build up an overall target based on what it thinks is possible in particular sectors and sub-sectors. Overall targets mean nothing unless they are based on an assumption and estimate of what is achievable at the level of sub-sectors and, in some large cases, individual businesses.
	Over 40 or 50 years, the climate change committee will have to be able, in giving us advice, to acknowledge changing imperatives and technological opportunities over time. The idea that we can look 15 or 20 years in advance and be pretty clear about what will happen in each sub-sector throws me back to my early days as a young economist at university looking at Russian and Indian planning, five-year plans and so on. It is a fine line between targets and sectoral planning. George Brown comes to mind—national plans and so on. The history of national planning is not a great success.
	This is one of the most important debates of the evening. Once you start thinking that the basis of overall targets is what can be achieved at the level of sectors, sub-sectors and businesses, one starts to see the dangers as well as the opportunities. Three five-year rolling programmes in advance can quickly turn out to be an illusion of planning, and you then get policies to achieve those plans over 15 years. The first conference that I went to as a young university economist was on planning coal production in the UK. All kinds of people told us how much coal had to be produced and how. It was a lot of coal. Eventually, we had to find a way of not producing a lot of coal, because people did not want that amount—certainly not of British coal. I was a Yorkshireman saddened by that.
	I simply give a word of caution. You can easily enthuse about what policies have to achieve in particular sectors. The challenge for the climate change committee will be enormous, given complex questions such as what is economically possible, what is technologically possible, and how to allow the marketplace to respond over time.
	Not as many people have quoted the CBI's work as they have Greenpeace, Friends of the Earth and so on, but I thought that the work by McKinsey in Climate Change: Everyone's Business showed what could be done at a strategic level. It also showed the gap between strategic thinking about sectors and what we are telling the climate change committee that it has to produce in two years' time. We are expecting it then to produce some pretty important forecasts, on which government policies over 15 years will have to be laid out. When those come before the Government and Parliament there will have to be careful examination of our enthusiasm for what can be achieved and how to achieve it.
	We will come in later amendments to the role of the Committee on Climate Change. There will always have to be a political judgment about what can be done and how best to guide it into taking us there. I think that the committee can only give guidance, because we could get into real difficulties if it becomes a planning agency for 15-year plans. The thrust of the proposal is enormously to be supported, but addressing the nuances and subtleties of converting it into action that Parliament, the public and industry can support and deliver will be a real challenge.

Lord Taylor of Holbeach: I return to the debate on the theme that the noble Lord, Lord Woolmer, brought up and which was raised also in contributions from other noble Lords. It brings to mind a particular element that we have not talked about: the degree to which there is genuine enthusiasm—a wish to co-operate and to see this working—outside political circles and among industry and the community at large. It is important to bear that in mind.
	The second notion that I would like to introduce to our deliberations is the idea that this does not need to be all top-down; it can be bottom-up. In fact, any sector that one can think of or that has been mentioned today has a capacity to produce of its own account a way in which to will the means to achieve the end. That is an important way of making this work, with a dialogue between the Committee on Climate Change and the sectors that it identifies. The sectors that volunteer because they recognise their own role do not want a decision imposed on them; they want to be part of the decision-making process. They need to be at its heart.
	I was reading something last week with my wife, a county councillor who was at the Local Government Association conference held last week. Confusingly, the association has a climate change commission that is looking at this matter. Its commission has come forward to volunteer the local government sector for climate change targets. It has recognised that local government is an area that can effect policies that will influence climate change.
	I introduced these amendments fairly briefly because they are simple. They would simply introduce sectoral budgets onto the playing field in order to give the Committee on Climate Change and the Government a mechanism to implement the Bill more successfully. A lot of good could come out of including and working with these ideas.

Lord Rooker: When I look back on this Committee stage I will probably say that this debate was one of the shortest and yet one of the most interesting. I have a speech that would more or less squash it all but I am still of the view that I should take it away from the Committee in order to tie it in with what was said last week. I will essentially be negative, and I will explain some of the reasons for that, but on the other hand we have just had contributions that have shown the practicalities. We have had the example of apples, though I doubt that the noble Earl was on about the apple sector. It might be the fruit-growing sector, or the farming sector as a whole. My noble friend Lord Campbell-Savours then gave the residential sector as an example. But then we had a local government issue, with residential issues mixed up with land. It is a question of looking at sectors. But then my noble friend Lord Woolmer referred to the national plan of the 1960s and George Brown. I said to my ministerial colleague on the Front Bench that, as I have now discovered, "Not all members of the Government have heard of George Brown, so mentioning him is probably not a good idea". I also expected my noble friend Lord Woolmer to mention the No. 7 tractor plant and the problem of picking winners.
	The noble Lord, Lord Taylor, in his second contribution, then made the distinction that, contrary to the point about the demise of the national plan, here we have almost a consensus in principle for industry, government and business actually to do something to make it work, but not to have it imposed top-down by telling individual companies and sectors what to do. That is the important point coming out of the debate. Obviously, we want to make sure that each budget and the 2050 target are met. We can agree that it does not matter where in the economy the reductions come from. We must be flexible about this. Flexibility is the key, along with the principle of making sure that we achieve the targets.
	There is a number of problems with the idea of sectoral targets, but it depends on how you look at the sectors. There is no doubt that this is where the national plan of the 1960s would have led, and did lead, to inefficient policy making. If you are rigid with your plan and your target, you get a problem. I was given an example in my notes. Evidence might come forward—and it is highly likely to come forward today—of a new technology that turns out to be the most cost-effective means of reducing emissions, but we might be tied to meeting the targets through other sectors. That way you would ossify the technology and the chances of putting it into practice. I am not knocking sectoral targets, but we must be flexible about this. As I said on Second Reading, operation of this kind of legislation will unquestionably lead to the creation of new businesses, but not all of them will succeed. We have to give them the flexibility to work out what is best.
	The emissions trading scheme is a good example of a policy that covers multiple sectors. One can broadly divide the economy into no more than five or six sectors, but we are looking at something below that. In a way, this comes down to letting the climate change committee take this principle, and maybe we will find a different way on Report of looking at the need for some kind of way forward. It should not be prescriptive, stop technology or wreck the putting into practice of new and good ideas, but it should assist those in different sectors who feel that they want to make a contribution.
	The noble Earl made a good point. I am not saying that he gave this example, but he identified the fact that the large retailers dominate our food economy. We have asked them on a range of issues concerning the food chain to ensure through their suppliers, as part of their job, that workers are not exploited, that the gangmasters legislation is operated fairly and that the minimum wage is paid. It is the retailers' job to make sure that the provenance of their products is okay—for example, by preventing the restamping of non free-range eggs as free-range. They can ensure that through each supplier in the chain. It is no different in the case of those who want to be associated with cutting emissions; the same can be done with suppliers, but you would not want to be prescriptive by ordering the sector to cut emissions. The work goes across many sectors.
	I shall take some advice on this. If there are any targets knocking around Whitehall—I suspect that we will have some figures in the department or in the Treasury, although I do not know—they are not being operated and they would not be prescriptive in that sense. We must be flexible, but we need people to be assured that the legislation has clarity and that we can take it forward.
	I have already agreed to look at other parts of the Bill so that we can find ways to demonstrate that the Government as a whole are committed to the issue. We do not think that setting emission reduction targets for each government department—to pick on Amendment No. 32—is the way but we will certainly consider that alongside the proposals we discussed last week. I do not think that anybody has used the word rigid about sectoral targets, but by implication they need to be flexible. We need to look at what we mean by a sector because that is not adequately explained. We need to make sure that the Committee on Climate Change has maximum flexibility in this with the good will and willingness of industry and competition and new technologies so that a door is not closed because some sector has been given a target that ends up knocking out an opportunity for new technology so that someone will not take the risk of investment. We would not want that to happen. If we can find a solution along those lines, we will have served the scrutiny of this Bill extremely well in exactly 30 minutes.

Lord Taylor of Holbeach: I am very reassured by the Minister's contribution and response to our amendment. I feel that we have taken the debate quite a long way. I hope it is a path for future discussions. I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.
	[Amendments Nos. 30 to 32 not moved.]
	Clause 4 agreed to.
	Clause 5 [Level of carbon budgets]:
	[Amendment No. 33 not moved.]

Lord Teverson: moved Amendment No. 34:
	Clause 5, page 3, line 18, leave out "26%, but not more than 32%," and insert "40%"

Lord Teverson: At the beginning of our debate on the first day in Committee we talked about an 80 per cent, or 60 per cent—whatever that percentage should be—overall reduction by 2050. At Second Reading, I felt there was particular feeling from all sides of the House for this very strange mid-point target that the Government had inserted into the Bill which—I do not know whether it was meant to but it clearly does—put in not only a minimum target range but also a maximum. It suggested that if the UK economy by 2020 reduced carbon emissions by more than 32 per cent, then somehow the Secretary of State would be equally culpable if he had missed the lower target. That seemed an extremely perverse and almost masochistic form of legislation.
	Our amendment does two things. It takes away the ceiling for reductions, which does not seem to make any sense, and it replaces the single target with a figure of 40 per cent. Perhaps we will get back into the previous argument about whether it is up to Parliament to decide what the target should be. Our view—and the Government's view, we have heard—is that there needs to be a figure in the Bill. That is the case for the final target and we believe that it should also be the case for the approximate mid point in 2020, and that the right figure for an 80 per cent overall reduction is a best estimate of 40 per cent. Where does this figure come from? It is half of 80 per cent—rather easier mathematics than we heard earlier.
	However, in terms of how quickly one can achieve the targets, there are clearly two forces working one against the other. There is the school of thought that there are easy areas to meet. The low-hanging fruit argument says that we should be able to save obvious carbon emissions quickly but that it will get more difficult as time goes on. On the other hand, we hope that technical innovation will be stimulated very strongly by the imperative of climate change. New technologies will come on stream some years ahead to allow the extra efficiencies to be met to a greater extent later. If we take the view that the two roughly cancel each other out, then the figure of 40 per cent is more or less correct and is suitable for the Bill at this stage.
	Over the past week at Bali, it was the EU's specific view that the target for developed nations should be between 25 and 40 per cent by 2020. That was for greenhouse gases generally but, as we know, carbon dioxide is the most important of those. I presume that the British Government fully supported the EU stance on targets to be met by developed nations and I would certainly expect them to have done so. If as a nation we are saying that we should be at the forefront of those targets and leading not just globally but within Europe, then, within that context, 40 per cent again seems to be the right figure. However, most importantly, we should remove the upper target. I beg to move.

Baroness Fookes: I point out that if this amendment is agreed to, I shall not be able to call Amendment No. 35.

Lord Crickhowell: Perhaps I should not have paid as much attention as I did to the last debate, as I had not intended to speak in it. However, I am taking the opportunity to refresh my memory of the evidence given to the Joint Committee by the Bill team and the then Secretary of State, David Miliband, who was cross-examined in detail on this point, but, first, I shall take up the point that has just been made from the Liberal Democrat Front Bench about European targets.
	It is worth remembering—the evidence was given to us by Mr Mortimer of the Bill team—that the UK's target of 26 to 32 per cent for CO2 translates into 32 to 37 per cent of all greenhouse gases. Therefore, the suggestion that we should lift the CO2 target to 40 per cent has some fairly substantial implications. However, I draw attention to the evidence given by the then Secretary of State, who has since been transferred to other responsibilities. I think that we should at least understand the case that he advanced under cross-examination, as it may help us to decide whether it was a strong argument.
	The Joint Committee finally concluded that it was not a very strong argument and said that it was not convinced by it. Basically, the Secretary of State's case was that this range of targets would be extremely tough to achieve. He said that, considering all the policies that the Government were putting in place, we had just about reached the limit. However, he also said that,
	"what has come through to us from the business community very, very strongly is that the debate about 2050, which has been significant, and the debate about so-called annual targets ... 'We are making investment decisions not on the basis of where we are going to be in 2050 and not on the basis of where we are going to be in one year, but where we are going to be over a five, ten, 15-year horizon'".
	He went on to say that he regarded it as extremely important to give a clear indication to business of exactly where the Government wished it to go. He said:
	"From a business point of view, the range actually provides a degree of confidence and certainty".
	He was then challenged by Helen Goodman from the other place who said:
	"So you are not saying that you would be concerned if we did better than 32 per cent?".
	Mr Miliband said no. Helen Goodman then said:
	"You could read the Bill like that, as it is drafted at the moment".
	Mr Miliband replied:
	"I would be more concerned if we were below 26 than if we were above 32, if that is what you are asking".
	He was then asked whether it was not rather odd to put an upper cap of 32 per cent on the provision, and then there was a diversion into the arrangements for changing the legislation and removing the cap if the circumstances should change.
	There we have it from the Secretary of State that the whole reason for this cap is to give confidence to business and industry. I entirely and completely understand why we have to tell business and industry exactly where they need to get to if we are to achieve the results we want, but I find it difficult to believe that the confidence of business and industry is going to be shaken by the possibility that they might beat the target. It is not a situation I have ever discovered in business. Indeed, the Secretary of State—or it may have been one of his officials—pointed out in evidence that it would be possible to bank the surplus and use it in future. Most businessmen would be quite pleased to know that if they exceeded the target they would have a cushion for any subsequent setbacks. So while I understand the desirability of giving confidence to business and wholly support the need to let business know exactly where the Government want to go, after rereading the Secretary of State's evidence under cross-examination, I remain as unconvinced as the committee was at the time. It is now up to the Minister, who is always compelling and convincing, to provide us with the certainty and the assurance that the now Foreign Secretary was unable to give us when he gave evidence to the committee.

Earl Cathcart: In one respect, these two amendments say the same thing: that the upper limit should be removed. We support that. In the unlikely event that the UK's emissions reductions are 50 per cent by 2020, it would be admirable and we would be patting ourselves on the back, but as things stand, with the upper limit at 32 per cent, a higher achievement would be against the law, which would be absurd. We believe that setting the upper limit by 2020 would fly in the face of the thrust of the Bill, but that is where the similarities end.
	The amendment tabled by the Liberal Democrats and the noble Lord, Lord Campbell-Savours, is for the reduction to be at least 40 per cent. That is consistent with what they previously said about target setting. We on these Benches do not support putting 40 per cent in the Bill. When Clause 1 was being discussed last week, my noble friend Lord Taylor of Holbeach argued that the committee not politicians should set the targets. His arguments apply equally to these amendments to Clause 5. Nearly all noble Lords who have contributed to debates on the Bill have said that the 2020 and 2050 targets are too low. Who knows? It might be that 40 per cent is the right answer, but we are saying that the committee should look at it and once it has looked at all the evidence and the science, the 2020 target can be set, but without an upper limit.

Baroness Miller of Chilthorne Domer: Is the noble Earl saying that he does not think the Bill should set targets at all or just not in this particular instance? Would he be kind enough to clarify that?

Earl Cathcart: The Committee on Climate Change ought to be setting this target in the same way that we are recommending that it should set the 2050 target.

Lord Woolmer of Leeds: There is a difference between the 2020 target and the 2050 target: the 2020 target is a staging post along the way. It might be thought that the Committee on Climate Change needs some guidance on the absolute minimum acceptable target and the maximum that it ought to think about. Why is that? At the maximum point, there is inevitably a trade-off between what it might be possible to force through and what the consequences would be. One of the many issues the committee has to consider is the economic consequences of trying to achieve different things. If we say, "We will not give the committee any guidance. It should get the highest level of carbon reduction it can", and the committee does that, the Government may then have to say, "We cannot face the consequences of that target". Other amendments in the Marshalled List would ensure that the committee will effectively determine what happens and the Government will simply have to put before Parliament what it recommends.
	There is an argument for providing guidance to the committee at staging posts along the way, but for my part the important question to ask the Minister in Committee is why the minimum target the Government regard as acceptable and the maximum they have in mind are reasonable guidelines to provide for the committee. If no guidelines are given, it is very difficult, but if a specific figure is given, it jolly well has to be justified. With respect to the noble Lord, Lord Teverson, I cannot see the argument that because 40 per cent is half of 80 per cent, that is a good reason for why it should be the figure the Committee on Climate Change has to draw up plans for in 2020. It is not a sound argument. The idea of a range for an intermediate position is not at all ridiculous; in fact it is entirely sensible.
	I am sorry to refer again to the McKinsey analysis, but I do so because what industry says is likely to have consequences. According to the report, far from the early years yielding low-hanging fruits, up to 2020 the price of carbon could reach 60 to 90 euros per tonne carbon equivalent. However, by 2030 it could fall to 40 euros. In other words, depending on how fast we try to go, the period to 2020 could be the tougher rather than the easier one, depending on what we are trying to achieve. So if you are trying to achieve 26 per cent as one target and 40 per cent as another, that is backed up sector by sector by the kind of policies required. I am sure the Liberal Democrats will be delighted to know that if they are going to achieve a 40 per cent target, they will have to build at least one nuclear power station a year for several years.
	When the figures are converted into actual policies, which somebody has to do, being firm on a figure of 40 per cent and telling the Committee on Climate Change to get on with it—and that any recommendation has to go before Parliament because the Government cannot say yea or nay—does not make sense. If the Liberal Democrats are anywhere close to power—they might be in a coalition government, but heaven forbid if they were—they would have something to say about it. They would soon find out whether judicial reviews and binding commitments hold water.
	My general point is this. A range is not a silly idea for an intermediate position. It provides flexibility and manoeuvrability depending on the circumstances, and it is achievable. It is not the same thing as specifying what is to be achieved 40 or 45 years hence.

Lord Rooker: We have had a useful debate. I am not seeking to cut corners, but in the interests of making a little more progress before we finish, I shall give a brief response and hope that the implications will be clear. We have already discussed the fact that the Committee on Climate Change will review the 2050 target to see whether it needs to be tightened. That is a firm commitment. As part of the review, the Committee on Climate Change will also need to consider the implications for the 2020 target—you cannot do one without the other. The brief, as I said to the noble Lord, Lord Crickhowell, is probably the same and prepared by the same person as prepared David Miliband's briefs—one has to be serious about continuity in Government here.
	Amendment No. 35 sets the upper limit on the 2020 target. It is designed to provide greater short-term certainty to business and should help to facilitate investment decisions necessary for paving the way to a low-carbon economy. We have conducted little analysis to date on the impact on the economy of reducing emissions beyond the 32 per cent, as that was felt already to be a challenging level. It is important that the analysis is carried out before any change is considered. That said, the Bill does not rule out reducing emissions by more than 32 per cent in 2020. That said also, I am prepared to take Amendment No. 35 away and to give it further consideration.

Lord Teverson: I thank the Minister for his response, but I will just come back on a couple of things. On the points of the noble Lord, Lord Woolmer, we should not forget what I should have said earlier but am sure all noble Lords are well aware of, that the 40 per cent reduction is on 1990 levels. As a nation, we have already achieved some 12 per cent—in terms of carbon dioxide, I think—although we know that since 1997 it has fairly flatlined. Those targets are rather difficult, because we are talking about figures relating to a baseline some 17 years ago—a bit like the rates or the council tax, which we never get around to rebasing. However, that is how it is internationally and that is how it should be in the Bill. Forty per cent is, I agree, a big target, but it is not as big as it seems for the first period.
	On the low-hanging fruit argument, as I said myself, there are arguments both ways. The huge potential from the unexciting and unsexy area of energy saving is well accepted—particularly in the domestic sector, let alone from energy saving in industry. That is a whole area where, with the right government policies and—let us not forget—public and personal motivation, we could achieve much. Having said that, I agree that there is more sense in the medium-term target going back to the climate change committee—more perhaps than the final one, although we have all accepted around the Chamber that the final target, at 60 per cent, is wrong. We are not absolutely saying that it is wrong, but we all believe that it is wrong. Therefore, what I am saying is that, if you have a mid-term target in the Bill, then it is going to have to be something of the 40 per cent order. That is a fact in order to meet the types of target that are going to be set for us—through Government, but suggested by the climate change committee. I misunderstand the Bill the way that I read it at the moment. To me, the statutory targets have to be between those two numbers—that is how it reads. If I read that wrong, then fair enough. Even then, it certainly needs amendments to point out that that is a target range above the statutory figure or however we move forward. That, to me, is not clear in the Bill at all—in fact, to me it seems clear the other way around.
	I thank the Minister for his reply. I think that the approach is starting to move in the right way. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendment No. 35 not moved.]

Earl Cathcart: moved Amendment No. 36:
	Clause 5, page 3, line 23, at end insert—
	"( ) for the budgetary periods including the years 2015, 2020, 2030 and 2040, must be such that the annual equivalent of the carbon budget for the period is lower than the 1990 baseline by at least any percentage that may be recommended by the Committee on Climate Change and approved by a resolution of both Houses of Parliament;"

Earl Cathcart: The amendment is directed at the part of the Bill relating to interim carbon budgets. It is part of our general strategy to ensure that it is the committee's recommendation, approved by Parliament, that is setting the targets. The amendment seeks to further the committee's role in target setting by placing the responsibility of setting the general framework and progress within the committee.
	The process of setting targets for carbon reductions requires a dual approach, focusing on both the short and the long term. The annual rolling targets and the yearly milestones are essential for monitoring the short-term progress, yet these are created with an eye on meeting the interim targets which are to be the scaffolding on which our progress hangs. It is thus very important that the long-term outline for fighting climate change comes from the committee. Any changes to the interim target should come from the scientists on the committee and also be subject to parliamentary approval.
	These targets are important. It is likely that meeting the interim targets will be the most public indication of a Government's success or failure in tackling climate change. Thus it is essential that they are realistic and authoritative. Having the committee set them achieves this result. It is essential to provide a genuinely independent yardstick by which we can measure the effectiveness of government action. Thus the amendment ensures that the interim targets are set in a way that squarely removes politics.
	My noble friend Lord Brooke of Sutton Mandeville noted on the first day in Committee that he had the accidental fortune of taking credit for the miracle that the British Library opened in 1998. I agree with him that it is difficult for a Secretary of State at any particular moment to be charged with a responsibility that spans 20 or 40 years. However, if these interim targets are set independently and publicly and are tethered to the short-term milestones, it might go some way to having a mechanism to ensure that the long-term targets have real meaning and we will be able to assess a particular Secretary of State's performance. This must be done in conjunction with reports that not only list the status of carbon counts but also provide an assessment of the measures that have been implemented to reduce emissions. We have tabled amendments to this effect. I beg to move.

Lord Puttnam: I support the amendment and use it as a cover for raising an issue that has been worrying me for the past couple of hours. I am very concerned that the sense of urgency is beginning to seep out of our debate. The word has not been used in Committee today but it remains very important. We have been watched from the Gallery by a number of young people; this is their Bill, not ours. Unless we address the issues we are here to discuss with a greater sense of urgency and with the constant sense that there is a clock ticking, we shall not do the Bill justice.
	I have two observations. At the weekend, I was watching World Service Television in Paris and a professor from the Cato Institute in the United States, which is a right-of-centre think tank, was being interviewed. He said in response to what was happening in Bali that any steps taken by any developed country which worked against the interests of industry and business could only damage the prospects of climate reduction because they would just get in the way of business sorting the whole thing out. That is a rather extreme view and I do not for one moment agree with it.
	I also read recently a very good book on aircraft production in Britain in the early years of the war and how, for a long time, it was left to industry to get on with it. It was eventually realised that this was not working and that we were likely to lose the war unless a more determinist position was taken, and a very significantly accelerated process of aircraft production was imposed on the aircraft industry.
	We need to strike a balance between assuming that, somehow or other, industry and business will sort this out for us, and the need to understand that the clock is ticking, and to make absolutely clear that the Government have the machinery to impose solutions where and when they are not forthcoming. That need has been a broad underpinning of almost everything we have discussed today. As anyone who reads our report will know, I bow to no one in enthusiastically supporting the formation of the climate committee and its powers and role in formulating policy. But it would be a dereliction of duty if we leave everything to the climate committee without a very clear mandate and timetable, and a sense of the urgency in getting this right. That is not, I am afraid, coming through in Committee today.

Baroness Morgan of Drefelin: I hope to change that sense of a lack of urgency. When I listen to this debate, I think about how old I might be in 2050; I look forward to being 89. I also remind myself that my daughter will be 58 and I hope very much to have some grandchildren, who will be, perhaps, in their thirties. When we start to think about climate change and how we are going to make really quite radical changes to our behaviour, the way we do business and conduct government, we need to inject a sense of urgency and remember that we are talking about the future of our children and grandchildren. I thank the noble Lord for reminding us of the need to inject a bit of urgency into our deliberations.
	The noble Lord highlighted that the Government, civil society and industry need the mechanisms and machinery in place to deliver the results that we all want to see. I know from experience of being in Committee that once you get into the detail, it can start to grind slowly. Noble Lords around the House will, I am sure, agree that the weight of responsibility on us to get the machinery and mechanisms right is absolutely self-evident.
	When the noble Earl, Lord Cathcart, talked about the kind of scaffolding that he was looking for within the Bill, he painted a picture around these interim targets. We on the Government Benches are talking about scaffolding that is much more based on budgets and budget-setting, advised by the climate change committee, and annual reporting and accountability to Parliament. I am not sure that we are all looking at things from such a different perspective, but we are getting ground into the detail.
	In speaking specifically to the amendments, the noble Lord will not be surprised to hear that we do not consider that Amendment No. 36 would add anything to the framework already provided in the Bill. The kind of scaffolding he is talking about is there already. In fact, it could undermine a key part of the Bill; that is, the idea of flexible five-year carbon budgeting to take us to 2050. That is the principle underpinning the Bill. There are clear reasons for including an interim target for 2020, which we have all just discussed.
	The noble Lord, Lord Crickhowell, who is not in his place just now, reminded us of the importance that the Joint Committee placed on this. Although he made points about the range, the committee particularly welcomed the importance to business represented by the 2020 target. However, to set further interim targets would restrict the flexibility which my noble friend Lord Rooker has highlighted time and again as being of key importance within this Bill. The five-year carbon budget framework provides us with important flexibility.
	Setting further interim targets at this stage would effectively dictate the trajectory to 2050 from the start. It is important that the committee is able to advise on the appropriate trajectory to 2050, based on the best information available at the time. This would enable the committee to take account of any future developments—for instance, in climate science, understanding the economics of climate change or the development of new, low-carbon technology.
	There is little point in setting the trajectory in statute now, as there are too many uncertainties. The trajectory would probably need to be revised significantly as we progressed towards the 2050 target. As has already been discussed in the context of amendments which called for annual targets and rolling annual targets, it is unclear how such mechanisms would interact. The intention to achieve increased long-term certainty would be undermined by these different mechanisms in the Bill. My noble friend Lord Rooker made commitments to consider quite a number of matters between now and Report, not least how we can strengthen the annual reporting processes to Parliament, which go some way to reassuring noble Lords opposite that we take seriously concerns about transparency and accountability.
	The amendment refers to a 2020 target. As we have made clear—my noble friend just highlighted it—the review of the 2050 target by the Committee on Climate Change will also consider the impact on the 2020 target. We are already committed to considering whether the review should be put in statute, as my noble friend has just reminded the Committee.
	My noble friend said that there is a great need for urgency. That is why the Government have brought forward, and hope to take a lead with, this groundbreaking Bill. With those comments, I hope that the noble Earl will consider withdrawing his amendments.

Earl Cathcart: I am not totally happy with the Minister's response. We have consistently tried to strengthen the role of the committee. If it is able to do what the amendment prescribes, it, too, can be inflexible. It would be good if the Minister reconsidered the amendment. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendment No. 37 not moved.]

The Duke of Montrose: moved Amendment No. 38:
	Clause 5, page 3, line 33, leave out "the number of years in the period" and insert "five"

The Duke of Montrose: We had an interesting debate on an earlier occasion when the noble Lord, Lord Teverson, tried to tempt us with the thought of changing away from five years. As far as I could see, the Government were not convinced, and I am not sure that the rest of the Committee was. The amendment would simply tidy up the language of the Bill and make it more precise. The Bill already stipulates that the number of years for a carbon budget period will be five. We see no reason why that cannot be reflected here. The amendment would simplify the language for what the "annual equivalent" means; that is, the carbon budget divided by five. I hope that it will find favour with the Minister. I beg to move.

Baroness Morgan of Drefelin: I thank the noble Duke for raising the amendment. I thought that he was thinking about tidying up the drafting for us.
	Amendment No. 38 would change the definition of an "annual equivalent" of a budget, so that it was always the total of the budget divided by five. As we know, the system of five-year budget periods in the Bill mirrors the length of current commitment periods under the Kyoto protocol and the EU Emissions Trading Scheme, as has been discussed in Committee. However, binding targets under the Kyoto protocol currently only extend to 2012, and it cannot be taken for granted that any future international agreement that sets targets would run on a five-year cycle. In fact, we touched on that at close of play in our previous sitting. Clause 18, therefore, allows the Secretary of State, subject to parliamentary approval through the affirmative resolution procedure, to amend the length of a carbon budget. That power can be exercised only if it appears necessary to keep the budgetary periods in line with similar periods under any agreement at European or international level. Before doing so, the Secretary of State must consult the devolved Administrations.
	Clause 18, therefore, ensures the timeframe of budgets in the Bill keeps step with future developments in the international context. However, the amendment changes the definition of "annual equivalent" within the budget, so that it is equal to the amount of the carbon budget for the period divided by five. I can understand why the noble Duke has moved the amendment but, given the points that I have made about the international context, he might consider withdrawing it.

The Duke of Montrose: I am grateful to the noble Baroness for the way in which she summed up the Government's position. Of course, when she starts talking about consulting devolved Administrations, all sorts of complications are likely to arise. I would like to reflect on what she has said. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 5 agreed to.

Lord Rooker: I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.
	House resumed.
	House adjourned at 9.56 pm.